Chinese domestic steel prices maintained solid growth last week after Chinese buyers started transacting on return from Ching Ming holidays.
The domestic price levels moved strongly on weekend giving firm signals of a market which will see the light of the day. The warming season improved the demand leading to stock depletion with the stockiest and traders. Apart from improved transactions increasing raw material prices supported the increase in prices.
Though inventories of steel products stood at relatively high level, the recent downward trend indicates demand from end users is gradually picking up.
The resoluteness of the market is all the more striking when viewed in backdrop of 25 basis point increase in the lending rates.
1. It is believed that growth in downstream buying with the approach of season has led to reduction in inventory for the 4th consecutive week. The construction steel inventory just before the holiday was 9.45 million tonnes down 4.38% WoW.
2. The price of raw material has shown uptrend increasing by 3% during the last week thereby enhancing the cost pressure in a already beleaguered market.
Although there is much to cheer about with the inventory in the supply chain right from the producer down to the trader stockiest and consumer plummeting a word of caution is advisable as the Chinese mills are going full hog attaining an all time high of 1.945 million tonne production per day in mid March raising apprehension of a surplus.
( Source: www.steelguru.com )