Xinhua News Agency reported that the lowest level of steel inventory and the record high cost of winter preservation and drives the steel trader dilemma in the choice of ups and downs of steel prices.

According to the latest report from Xiben New Line Stock Co Ltd the domestic well known steel spot transaction fair, Shanghai construction steel has been consolidating the low level price after 2-week rise and the leading steelmakers have become more cautious to fix a price.

Relevant monitoring data shows that Shanghai Construction steel prices appeared the situation of overall down trend. Up to 19th, Xiben index is quoted at CNY 4560 per tonne down by CNY 30 last week. Representative specifications of Shanghai high quality 2nd grade rebar are currently adjusted to be around CNY 4480 per tonne down by CNY 20 last week.

High quality 3rd grade rebar is quoted at around CNY 4600 per tonne down by CNY 40. Some analysts told the reporter that the steel price falling in the range of around CNY 50 is based on the increase of CNY 350 in the past two weeks before the week which disclosed the dilemma of steel traders on ups and downs of steel prices.

As per report, steel inventory has hit the lowest level of the year down 40% compared to high level at the beginning of the year while the winter preservation has hit the highest cost. If the steelmakers sold products at low prices, they would face high replenishment in later period. The construction steelmakers are more cautious on EXW price fixing through controlling the price up or down at the range of CNY 30 to CNY 50. However, Purchasing price and selling price have become inverted in the market to some extent; so far, inversion of price of leading steelmakers in East China has been at the range of CNY 150 per tonne to CNY 200 per tonne.

According to the analysis of relevant analysts, the current steel price has dropped slightly with drop resistance. After 2-week high volume transaction, demand in steel market appeared correction and the medium trade volume apparently decreased. However, the steel demand may increase since the slack season is yet to come.

The decrease of steel inventory and the firm prices of raw materials have limited price adjustment space of steelmakers to certain extent. Therefore, the steel market will present a vibrated adjustment trend without a great change.

(Sourced from Xinhua News Agency)