October 07, 2008

Analysis of Baosteel May price policy

It is reported that Baosteel which unveiled it price changes for May 2008 recently mainly touching upon HRC, CRC, HDG, HDG and many other varieties such as cold forged steel, low carbon wire rod, die steel and other high end steels is on brief analysis.

Analysts see from the change details that Baosteel is differentiating pricing for higher end steel products and the common products, reflecting higher quality, higher price principle. Analyst said this boosts the market confidence, though some common varieties are not adjusted, and gives a signal the top Chinese steelmaker is positive toward future steel market.

When the bullish factors such as 65% ore benchmark price hike, Baosteel pushing up Q2 prices and the market enthusiasms are fading out, wire rod, HRC and CRC prices went downward in March from previous wide surges, leading the market into slight adjustments.

While Baosteel's new policy for May rekindles the market sentiment and is expected to stimulate a rebound. However, it's close to the end of this month, traders are facing financial strain again, end users' consumption remains unreleased vigorously and the inventory is big.

Though high cost can push the market higher, it's not helping absorbing the low priced stocks, the analyst also warned not to be too optimistic as supply and demand correlation will finally decide the market situation.

(Sourced from MySteel.net)