Changjiang Daily reported that China steel price surge in recent months could be well explained by the rising demand fueled by recovering domestic economy especially in real estate and manufacturing sectors as well as large scale national infrastructure construction.
Besides, figures in fixed assets investment, Purchase Management Index and auto production and sales seemed encouraging also a trigger for steel market growth. On the other hand, however irrational speculation should be most partly responsible for the continuous upsurge of steel price in such short period. In steel future market rebar soared 43.37% in just three months.
Like nonferrous materials such as copper, lead and zinc and other bulk commodities, the speculative activity in steel market is an antidote to the risk of inflation fueled by the devaluation of US dollars. This sharp price rise is not a result of the physical demand increase in the economic recovery but of the waving capital market.
China is now the No 1 steel maker in the world with its output of steel products five times that of the United States or Japan. Its production this year is expected to have a surplus of 100 million tonnes.
(Sourced from Changjiang Daily)
