Last 2 days in week 31 has been neutralizer of the initial gains In the first 3 days of the week steel price improved by 1 % Likewise in the last couple of days retrace in equal measure has left the market unchanged.
When the week began with price hike in long and flat products it came as a reprieve after the a month long mauling in July with price declining by nearly 8% There was no jubilance in the market because the reason for the improvement could not be ascertained. Demand fundamentals remaining unchanged and no growth triggering overtures by the government market remained clueless about the change of direction.
Typically correction after a phase of erosion it appeared the bottom had been reached. With the monsoon nearly over it was turn of the market to develop resistance. Despite absence of any traction price are unlikely to fall further.
To some extant mills hasty retreat in production by advancing maintenance schedule to align supply with demand was also responsible for built up of optimism. Factually the time gap was too short for the demand supply gap to re-adjust so quickly to have a fall out on the market levels.
The inventory remains high at around 15 million tonne despite all the talks of production pruning. July PMI dropped by 0.1% from June to only 50.1, turn around remains under cloud.
CLPPI - Chinese Long Product Price Index
CFPPI - Chinese Flat Product Price Index
CHISPI - Chinese Steel Price Index
Source - Strategic Research Institute