China’s inventory on construction steel sees growth when the Spring Festival is over. Most market participants deny the possibility of positively stockpile by traders which in their point of view is passively replenishment. For the steel market after the Festival, demands incur difficulty to kick off and the scene that stock is larger than delivery sets to continue.

Alarming features of 2011 on steel market frustrates people:
(a). The percentage of loss incurring enterprises is climbing when it is approaching to the year end;
(b). No winter stock is seen for most traders;
(c). Traders are reluctant to push the price higher before and after the Festival. Steel market might not sense any optimism at least in the short term.

Then how to explain the increasing inventory catches the attention. Insiders indicate that it is a passive stockpile rather than normal stock driven by market demands. Reason supporting this statement is that no obvious sign for initiation has been seen while traders get arrivals after the Festival in accordance with monthly plan.

If compared carefully, both inventory volume and increasing amount is less than those for 2011. On the one hand, this situation concludes that steel mills’ release capacity stays in low on the other hand, trader are generally maintain cautious and are reluctant to build inventory.

The biggest constraint factor for steel market is demands instead of supply. The sluggish transactions give no impetus to price rise. Demands recover hardly; regulation on real estate exerts pressure on steel market, hence it is difficult for steel price to hike. But when taking cost and capital into consideration, the dumping room for the price is also limited. Small ranged fluctuation will be the major move.

(Source: www.steelhome.cn/en)
China steel information centre and industry database