China’s macro control policy will make Chinese steel market a bit tight at first but only to become loose later.
The first unbalanced interest rates increase policy has reflected this feature exactly. The pressure from the continuous deflation of US dollars has forced China’s government to increase the value of RMB, in order to offset that pressure. However, China is now facing serious inflation. Therefore, interest rates increase will become the first option among all the macro control policies.
Rising cost will become the normal condition
The energy conservation policy implemented since last Q3 has a dramatic influence on China’s domestic steel market, and it will further affect this year’s steel market. The price rise of coal material from both domestic market and international market has already been recognized.
On one hand, the international price rise of coal originating from Japan’s steel enterprises has caused the corresponding price rise of coal in China’s market; on the other hand, the main coal-producing provinces such as Shanxi has promoted industrial restructuring, which also helped to push coal price upward further.
From the long term, China’s steel market is facing great policy pressure. However, the current steel market will still be able to rise in Q1 because it has a firm cost support.
(Source: www.steelguru.com )