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China's steel industry may lose its edge - Analyst

Steel News - Published on Mon, 17 Jul 2017

Image Source: SteelGuru
The National reported that these are great times for China’s gargantuan steel industry as product prices soar to multi-year highs, mills’ profits swell and speculators stake out record positions in futures markets in the country that makes half of global supply. They could be over soon. Mr Xu Ke an analyst at Huatai Futures said that “While demand in Asia’s top economy has remained strong, as the property market cools and investment growth slows, steel prices will start to fall. We’ve seen many times in the past that when prices fall, they can fall very quickly.”

Mr Xu said that “There are fundamental factors underpinning the price surge, citing the tighter supply after the government efforts to cut steel capacity.”

He added that “I’m generally more bearish about the second half than most.”

China’s old-economy steel industry is booming even as the central government seeks to rein in its more unruly elements and combat overcapacity. State ordered closures of induction-furnaces have spawned a shortage of reinforcement bar, a basic product used in construction. That’s hoisted prices and attracted speculative interest. Still, with slower growth seen this half, and other mills expected to boost output, the rally may be set to falter.

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Posted By : Sanju Moirangthem on Mon, 17 Jul 2017
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