Week 13 belied any surprises by maintaining a steady improvement witnessed towards the end of week 12. The modulated trajectory of ascendancy signifies solid improvement with speculation playing second fiddle for a change.
The market already yearning to open on a resounding note as the seasonal demand unfolds has given rise to hopes of sustained improvement.
It is learnt that apart from the domestic demands the void left by the curtailed production from Japanese mills has played a stellar role in resurrection. It is estimated that there will be a drop of nearly 11.5 million tonnes in steel production from Japan. The fall out in the ASEAN market will be a gap of nearly 3.5 million tonnes. The insatiate demand has spurred Chinese mills to step into the shoes.
The period of March to May is typically of peak demand as construction activity picks up. Hence traders’ stockiest who had been subdued post spring festival have become resilient and active with an optimistic outlook as the prices improve in anticipation of demand. With slew of infrastructural and housing projects on the anvil the aspirations might not turn out to be misnomer for a change.
The euphoria has been contagious in the sense that mills have been ramping up production MoM touching an average daily production of 1.94 million tonnes in the middle March a hike of 2.18% over February
Several mills promptly revised there EXW price for April. Taking cue Jiugang Lanzhou plant raised CNY 30 per tonne for rebar and wire rod, with Q235, 6.5-10mm at CNY 4630 per tonne and HRB335, 16-25mm at CNY 4560 per tonne. Moreover, Xiamen Zongda raised wire rod and rebar by CNY 50 per tonne.
Although with the moorings of a sustained revival and growth in steel demand and prices the undertones of realism and caution is always advisable. Some of the insiders opine the revival will be short term. The resounding growth in production might prove to be its own nemesis. With the inventory of 5 major steel product touching nearly 18 million tonne on 25th March and destocking going on at snail pace the horizon looks hazy.
On the whole, the Chinese Long Product Price Index CLPPI surged by 56 points last week whereas the Chinese Flat Products Index CFPPI also up by 63 points. The overall price index CHISPI inclined by 59 points.
( source: www.steelguru.com )