Chinese domestic steel price showed a sigh to rate of decline on September 23 but marker players are uncertain what will happen in future.
At first, the price increases several days ago is due to the reasons as follows
1. End users add orders to prepare for the National Holidays
On the one hand, end users are willing to add more orders in such low price. On the other hand, the purchasing peak appears in construction sites as they prepare for the holidays. As a result, the end demand enlarges, which promotes the price. The higher price causes the recent fewer orders again. We can see that the increasing price is unstable.
2. High inventories
Because most of the inventories are in high price or resource of pledge loan, it is impossible to sell them at a low price.
3. Raw material prices slightly rebound
4. Traders stock more gods which increases unreal demand
In common condition, Chinese steel market price will continue to increase for a long time, but the little rise has battered market sentiment this time. Therefore, many market players’ delivery is in low price to recycle money.
Moreover, market players hope the reduction in production and capacity could rise steel price. The all steel manufactories’ leaders who attend the North China strip steel conference mentioned the problem of overcapacity on September 24. Generally speaking, it is less likely to reduce the production in short time considering the present cost and fund. Only if the factories has no profit and is out of the funds, the aim to reduce production may realize.
On the contrary, raw material price is higher than that finished products. This price gap causes a great pressure to manufactories. Fortunately, manufactories will steady the price as the earning is good during this period. However, market players gradually lose the confidence to the market as the market is quiet.
Overall, the later trend of Chinese steel market is still uncertain.
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(Sourced fromwww.steelprices-china.com)
