News Room - Steel Industry

Posted on 21 Mar 2008

Soaring steel prices in China make no room for prospective rise

At the threshold of 2008, steel price in China flied comparing with that during the end of 2007. Up to Mar.03, CR sheet, HR coil and medium plate were priced up by 1050 (up 18.58%), 620 (up 12.7%) and 870 (up 5.78%) Yuan per ton. 

As for the reason of price hike, they are strong home demand, undersupply and monthly decreasing inventory to blame. In Jan-May of 2007, steel price in China earned mild rise month by month and peaked in May, also, steel price, starting from Sep of 07, began to run ahead of the level set up in May and grew gradually till Dec.

At the beginning of 2008, pushed by high cost, groups of small mills met production cut or complete halt, resulted in output reduction nationwide, nevertheless, due to snow storm and prohibited transportation in Jan-Feb of 2008, steel price hardly earned rise of some magnitude until Feb.05. In addition, rocketing iron ore contract price however was the leading factor pushing up steel price around the globe or in China.

The surging steel price in early Mar deprived any likelihood of further rise caused by growing cost. The soaring steel price enabled industrial products nationwide EXW prices to run up by 6.6% in Feb, which intensified inflation pressure, therefore, macro-control measure manipulated by government shall play a more important role for steel industry.

When it comes to the price trend in China after Apr, 2008, it depends largely upon the change between supply and demand, output growth, impo & expo change, and to what extent that macro-control policy would impact fixed asset investment and export trade. Moreover, what differentiate steel industry in China from other countries lies in the surplus of production capacity toward home market, capacity release and net steel export came on like gangbusters for the home steel price change.