Overcapacity and increasing imports to hurt Chinese steel prices

It is reported that China's steel prices continued moving up last week at a slower pace following the rebound starting from early April. This has heated concerns among the industry of over fast capacity release and the flooding import and aroused considerations that the steel market will walk many "W" paths this year.

China Business News learned from the steelmakers that flats market remains under pressure in face of blocked export and sluggish end demand at home. The slight rise in last week was a result of being boosted by the construction steel market, but notably, there is no momentum for further rise. Additionally, the billets for making construction steel has fallen by CNY 50 per tonne to CNY 150 per tonne from a week ago, suggesting that construction steel, strip and section markets are going to soft as well.

Insufficient demand and oversupply will combine to work out a cycle of price rise, output expansion, price drop and output cut, so the price is expected without a big lift, chairman of Shagang Group Gongsheng noted, saying the current market price has been not bad.

The nation is advised by the insiders to moderately relax export curb on some long products, now that the longs market has performed better than the flats especially with recovering of the oil price, demand for longs from the Mid-East will further increase. Moreover, export rebate for some flat products should also be advanced, particularly HR sheet, CR sheet, medium-thick and wide strip, HR thin and wide strip, CR thin and wide strip, HR narrow strip, CR narrow strip etc.

May 27, 2009 09:25
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