Chinese steel market ended the week with a surprising rebound. Even though it is difficult to gauge the reason for this weekend blip it certainly gave hope to resigned sentiment.

Monday blast was on expected lines after the weekend fever of CNY 1 trillion stimulus packages by National Development and Reform Commission approving 30 infrastructure projects. Barely 25% of the 2009 booster it has come as a welcome reprieve.

Day 2 carried the momentum forward with the price spike touching 3%. Spectacular pyrotechnics in the domestic market set the sentiments ablaze if not the demand. Typical of Chinese market demeanor rally is as mercurial as the debacle camouflages the inherent fundamentals.

On Day 3, market reacted in brazen fashion with rattling even iron ore prices by nearly 15%. However the sustainability of blitzkrieg was always questionable with core issues regarding funding of the new projects remaining unaddressed. Notably availability of cheap credit is vital for financing private sector. State weary of the inflationary pitfalls and piling bad debts has opted for silence. Reality sector being the main proponent of steel demand has been bête noire of the state economic policies. Even though inflation has been reined at 3-3.5% government cannot let go the caution at the time power transition in the politburo.

Day 4 in week 37 aroma of refreshing revival commenced vanishing. Seeming like a vanishing apparition of haunted house market lost 1% today raising fears of reversal. Living up to the anemia which set in yesterday today’s decline erased doubts about the short lived revival.

Relapse brings to the fore the mute question of concerted efforts by the government to address the fundamentals. Despite the diabolical halo acquired by the reality sector it seems to be the only panacea for its woes. An elusive government has to come to terms of reduction in lending rate and swallow the inflationary bitter pill to some extant as a medium term solution. However a long term solution is dependent on upturn in global economy.

Some optimism dawned amidst speculative mist about the quantum of steel demand likely to unfold. Steel majors like BaoSteel and Wuhan opted for rollover in October hopeful of better market condition as the demand unfolds. Most of these projects are long term but it has bolstered the confidence of the steel majors resist any correction.

The Chinese Long Product Price Index CLPPI has gone up by 131 points last week whereas the Chinese Flat Products Index CFPPI has also gone up by 157 points. The overall price index CHISPI inclined by 146 points.

CLPPI - Chinese Long Product Price Index
CFPPI - Chinese Flat Product Price Index
CHISPI - Chinese Steel Price Index

Long Products

PI - Product Index

Flat Products

PI - Product Index

These indices have base of 10,000 as on July 1st 2008
To know more about these indices please visit
http://steelprices-china.com/spi_services/spi.html

1. Long products

Billets
150*150
Q235

Change is on 14th September as compared to 7th September 2012
Change is per tonne

WRC
6.5mm
High Speed

Change is on 14th September as compared to 7th September 2012
Change is per tonne

Rebars
20mm
HRB 400

Change is on 14th September as compared to 7th September 2012
Change is per tonne

Angle
#5

Change is on 14th September as compared to 7th September 2012
Change is per tonne

Channel
#16

Change is on 14th September as compared to 7th September 2012
Change is per tonne

Beam
#25

Change is on 14th September as compared to 7th September 2012
Change is per tonne

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Source - Steel Price China

(www.steelguru.com)