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Reasons for price rebound of long products in China

It is reported that the new round price rise in long products will continue driven by the warming demands in traditional busy seasons: Q2 and Q3. Besides, the state-invested projects gradually are put into practices at present, also boosting demands, though more and bigger projects are anticipated to be carried out next year.

In long products, especially rebar, the outputs in China dominate the global market, which basically confirms China’s position in deciding the price in spite of international moves. By contrary, domestic medium plate prices stay higher than oversea prices, bearing the pressure.

According to the cyclic fluctuations in steel prices, the price rose up for 9 straight weeks since last Nov, then fell back for 10 weeks since Feb, and then rebounded since mid April for 4 weeks. During the latest rising period, rebar price raised by 5.5%; wire rods by 6.43%; HR by 5.14%; CR by 3.79%; medium plate by 1.98%.

It’s expected this round of rise will last at least for 10 weeks as showed by the rules of fluctuations and might be prolonged by the midseason. Lately, stocks of rebar and wire rods decreases, while their outputs stays in high level, implies the real appetites of steel users, which will help the continuous rise.

In terms of production cost, price for imported iron ores is close to the bottom with narrow space to go down; meanwhile, the ore talk is put off into the traditional busy seasons, when increasing demands will push up ore price rise to some extent, though China insists the requirement of over 40% cut in ore price. Thus, the not-to-fall ore price will give a cushion under steel prices.

May 30, 2009 14:19
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