After a week’s correction steel prices made a turnaround gaining both in long and flat products across the regions. With all the fundamentals strongly disposed in favor of price climb the recent correction was mystifying.
The factors prevalent for the revival are as follows
1. Hike in raw material cost viz., iron ore and coke
2. Unfolding of the peak season demand after the spring festival
3. Massive infrastructure development allocation in the 12th Five Year Plan to enhance water conservancy construction with allocation of CNY 400 billion in 2011
Construction of 10 million affordable houses- affordable housing programs, with total investment over CNY 1400 billion, is in the offing.
The recent price hike announced by steel majors BaoSteel and Wuhan was indicative of the things to come and set the tone for revival in market in anticipation of ameliorated demand as the temperature increases. Undeterred by deflationary policy measures the present uptrend will be sustainable as the odds are heavily in favor of demand revival.
(Source: www.steelguru.com )