Monday opened to a thunderous rally in steel prices clocking 2%. Notably basking in the glory of QE3 by US Federal Bank market reacted sharply. As the US Federal Bank went ahead with an aggressive bond buying to the tune of USD 600 billion under the stimulus program it send global financial markets scurrying.
Tenure of the QE3 has been left open ended with the target of 7% unemployment being the only bench marker before it is halted. Since the presidential elections are due in couple of months any tightening is unlikely shortly. The dollar index stood at 78.802, having fallen as far as 78.601 on Friday, a level unseen since late February. It has shed some 6 percent from a two-year high of 84.100 in July.
Chinese steel market had reacted with stability on Friday which blossomed into efflorescence on Monday. US and Europe being major trading partner for China any turbulence in Green Back entails immediate impact on the sentiments of Chinese steel market.
However the core fundamentals remains saddled with over production as the daily crude steel production in1st 10 days of September again increased by 1.2 percent to 1.895 million tonnes from the preceding 10 days.
Speculative flare is unlikely to last unless buying picks up in Q4 and mills rein production. However elastic iron ore prices in flared commodity trading might give traction to cost and finished prices.
CLPPI - Chinese Long Product Price Index
CFPPI - Chinese Flat Product Price Index
CHISPI - Chinese Steel Price Index
Source - Strategic Research Institute