The opening of week 10 was inauspicious for the Chinese steel market as the month long decline gained momentum across all products putting to rest any hope of early revival in the season. Nearly 1% drop within 4 days personified the dilapidated market conditions. Demand refused to pick up from any vital quarters.
The market has lost the impetus to revive as the demand remains withdrawn and circumspect .The government in its enthusiasm to reign in the inflation seems to have over played its nobiltiy as the market gone in seclusion at an inopportune moment.
Aggravating the agony has been a zealous production performance by the Chinese mills notching a growth of 5.7% in production in February over January. With major steel product inventory touching dizzying 19 million tonnes in March there seems to be barely any respite from this vexed situation in the coming weeks.
According to China Federation of Logistics and Purchasing (CFLP), PMI in Feb was 52.2%, showing consecutive three months decline, indicating a possible economic downturn in advance.
With the international prices showing signs of flagging having lost USD 30-40 per tonne during week 9 and the waiver 9% rebate on some steel products from 1st April exports will be unlikely an outlet for stocks.
The only savior can be opening of demand in the domestic market from construction segment wherein experts believe sufficient credit is still available. Moreover with an end to weather-related electricity rationing, and the imminent onset of the Chinese peak demand period for the construction markets in March to May revival might sneak in.
( Source: www.steelguru.com )