Barely 4 days into week 31 when the long cherished turn around in Chinese steel prices commenced market sputtered today. Even though the reversal was premature it was inevitable since the demand fundamentals had not shown any ruffles.
As mentioned in our article in STT dated 01/08/12 (Week 31 Day 2 - Momentum picks up in China but will it sustain) improvement as more of a market adjustment than revival. Steel price having lost nearly 8% during July itself was in any case due for some correction before the next course was to be determined.
Inventory levels remained high and so did the government remained non-committal on easing of lending rate to spruce buying. Mills however off late have tended towards production rationalization by pre-poning maintenance schedule to align supply with demand. Noble out comes of these rearguard measures are yet to be seen.
We had mentioned in our article that revival is likely to commence in true sense around end August early September when stock replenishment will commence before the close of winter. Moreover the European, US and MENA economies will make a last ditch bid before year closes to replenish stocks.
Till that time ambulation will be marked with jerks.
| Class | 01-Aug | 02-Aug | Change | % |
| CLPPI | 6675 | 6652 | -23 | -0.3% |
| CFPPI | 6025 | 6005 | -20 | -0.3% |
| CHISPI | 6307 | 6285 | -22 | -0.3% |
CLPPI - Chinese Long Product Price Index
CFPPI - Chinese Flat Product Price Index
CHISPI - Chinese Steel Price Index
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Source - Steel Prices China
(www.steelguru.com)
