It is reported that generally May and June are traditionally important season for Chinese steel producers and traders to empty their stockpile, but this custom was broken up this year. Although steel products prices have been moving up for several straight weeks, the May inventories are far higher than records of the same period in history.

As per report, China’s domestic steel market has been growing for six consecutive weeks with leading steel mills pushing up ex-works prices one after another especially in a wake of the first settlement of iron ore contract prices for fiscal 2009 between Japanese and Korea steel producers and iron ore giants.

By the end of May, Angang, Benxi Steel, Hebei Steel, Shagang and other domestic big steel mills have increased ex-works prices for June deliveries by CNY 50 per tonne to CNY 150 per tonne. Amid these adjustments, the gains for construction steel products are the most highlighted.

A trader told Economic Information Daily that "Market demand should have been the most blooming in May and June during which time inventories lost most rapidly. But in terms of current situation, things look black in steel transactions in spite of rising prices. It may get further worse when it turns into the low season for steel market.”

According to the mid May report issued by China Iron & Steel Association daily production of crude steel reaches 1,478,000 tonnes only slightly less than the highest February figure. It is expected that the crude steel output this year will beat 539 million tonnes an increase of 79 million tonnes from the slated 460 million tonnes in the start of the year.

(Source: Economic Information Daily)