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China HR market to go down further - Mr Li Zhongshuang- 14Jun 10

According to, Mr Li Zhongshuang manager with Shanghai Ruikun Metal Materials Co Ltd in an interview, China HRC market is expected to go down further in fluctuation in short period.
Mr Li Zhongshuang said there are six negative factors that shore up his anticipation about the market future behavior.

1. The European sovereign debt crisis has brought about uncertainties to the world economic revival, causing capital flowing to the United States, USD appreciation and drops of bulk commodities prices. Besides, measures will be made in China to tighten the relaxed credit market.
2. Downstream demand shrank both in real estate where government housing control measures have damped down the need for house and steel prices, and in auto and electronic household appliance, which caused evident reduction in demand for CR products.
3. Export was checked by declining overseas steel prices and the portion of steel products for export have to be digested in domestic market, pressing the already high market inventory more heavily.
4. Steel mills such as Baosteel and Shagang are scaling down their ex-works prices, bad news for the diving steel market.
5. Steel market demand was impacted by the traditional low season in July and August and popular sentiment of buying in when price is rising instead of falling.

6. The falling steel price will be a help for the government policy adjustment and iron ore talk.

Therefore, it is expected that the steel market downturn will last quite some time as these adverse factors are unlikely eased in short term. The HRC price will possibly move down from the medium-term run and barely rally in a real sense by end of this year.

Jun 14, 2010 08:23
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