Steel market treads the beaten path with further decline in by 1% on the first day of week 32. Malaise which set in towards the middle of last week after brief flutter earlier seemed extending this week.

Weakness was writ large in the market sentiments as the key issues of over production and bulging stocks remained unresolved. Mills having clocked 60.1 million tonne crude steel production in July seemed unrelenting in highly fragmented steel industry.

Steel majors, like Baosteel, Hebei Steel, Shougang, Angang and Shangang were eager to welcome “winter storage”. The deluge is unlikely recede in the coming days with many mills on the verge of completing expensive upgrades undertaken during the boom of last decade.

Reportedly, some private owned steel mills have suspended production for maintenance to rein output. Moreover major mills have appealed to the authorities to fast track production rationalization policies like energy saving emission reduction, inefficient capacity elimination, mergers & acquisitions, value-added tax rebate aimed at aiding the country’s struggling steel sector etc, thereby reducing production.

Notwithstanding the above long term solutions and mere cosmetics in the short run the pivotal issue of demand generation remains elusive. Much talked about post monsoon demand from construction segment and unfolding of government sponsored infrastructure is yet to see the light. Arrival of baptism remains an unanswered question.

CLPPI - Chinese Long Product Price Index
CFPPI - Chinese Flat Product Price Index
CHISPI - Chinese Steel Price Index
(www.steelprices-china.com)

Source - Strategic Research Institute

(www.steelguru.com)