STEEL PRICE WITNESS A REBOUND DUE TO DECLINING INVENTORY

Steel price is going through a round of rebound as demand peak season is coming, consuming inventory on steel market.

Data by Mysteel showed steel price of North China market steadily moved up on April 6th with that of South China edging up and of East China pushing up in trading session. Rebar futures closed at CNY 4874 per tonne, up by CNY 98 per tonne d on d, despite PBOC raised the interest rate by 0.25% again. It is analyzed that US dollar index was weak, bolstering commodities prices.

The overall trend of steel market in Mar was downtrend, finally witnessing a rebound around Ching Ming Festival. It is believed that downstream purchase became the main supporting factor, cutting steel inventory for consecutive four weeks.

Before Ching Ming Festival, construction steel inventory in main cities was 9.4515 million tonnes, down 4.38% WoW moving down quicker than previous week, indicating demand became stronger than before.

At the same time, raw materials prices showed a rebound, esp. iron ore, for instance, 63.5% Indian fine ore quoted around USD 181 to USD 184 per tonne on dry basis, up 7% w-on-w, providing support to steel prices.

Continuous high output may dampen market sentiment, according to China Iron and Steel Association, average daily output of crude steel in mid March was 1.945 million tonnes, up 2.18% comparing with previous ten days, reaching record new high again. But some research report by securities companies showed the inventory on producers, traders and downstream enterprises’ sides was low, meaning most of products were mainly used in real consumption. It is estimated that real demand plus restock may cause production shortage, pushing up industrial profits.

(Sourced from www.mysteel.net)