Marvelous Monday saw an amazing price rally in steel market by 2%. Coming on the heels of week long hiatus market started on refreshing note. Drenched in expectancy of rally in the last quarter with supported by slew of stimulus ranging from USD 150 billion infrastructural package and reduction in CRR ratio sentiments flared astonishingly . International economic situation enlivened during the week with lowest unemployment rate at 7.8% in the year and embalming QE3 worth USD 600 billion. Even though EU theatre remained muddled positive indications by the ECB to swap short term securities with 10 year bonds has given fillip to the market.
Shanghai rebar steel futures rose nearly 2% on Monday to the highest in almost two months as Chinese traders returned from a week-long break armed with hopes demand in the world's top consumer will pick up as the economy stabilizes.
Steel's rise suggests prices of raw material iron ore are likely to rebound this week, with Chinese mills also expected to return to the spot market to replenish stocks.
The most active rebar contract for January delivery on the Shanghai Futures Exchange hit a session high of CNY 3668 (USD 580) per tonne, its loftiest since August 17 closing at 1.6% higher than last week at CNY 3656 per tonne.
Resounding rally in finished price soared activity in iron ore market with mills looking for stock replenishment. Earlier major mills had stopped buying as fallout of production cuts to align supply with demand. Iron ore stockpile dipped by 1.5 million tonne from 3rd to 4th week of September to 95 million tonnes.
Daily crude steel production as per latest statistics from the China Iron and Steel Association (CISA), major large and medium steel enterprises produced 1.52million tonnes of crude steel on a daily basis during Sep 11-20, down by 2.73% from the previous 10 days. And it is estimated that China’s average daily crude steel output reached 1.857mln tonnes in mid Sep, down by 2.01%.
Canvass looks colored for short burst of activity in the Chinese melodrama during October.
CLPPI - Chinese Long Product Price Index
CFPPI - Chinese Flat Product Price Index
CHISPI - Chinese Steel Price Index
Source - Strategic Research Institute