Steel prices in China may fall this month as high inventory with
traders and end-users signal for a weak demand, Mirae Assets Securities Co.
said.
Inventories are at a 44-week high and stockpiles held by
Chinese machinery traders have climbed to a record, Mirae Assets analysts
Shirley Zhao and Henry Liu said today in an e-mailed note, without giving
details.
The market usually expects steel demand to rise as
construction resumes after the weeklong Chinese New Year holidays, which ended
on Jan. 29 this year.
“Unlike this year, the construction demand for machine power
has been weak, with a disappointing improvement post the Chinese New Year, due
to insufficient cash injection from local governments into infrastructure
projects,” Mirae Assets said in the note.
“The current rise in ex-factory prices by major steel
companies is mainly being driven by steel mills rather than end-user demand. We
believe steel mills will have to compensate traders later when prices fall.”
The prices of hot-rolled coil (HRC) , a benchmark product,
traded in China at 4,239 yuan/MT today, little changed from 4,219 yuan on Dec.
30, according to researcher Beijing Antaike Information Development Co. Prices
have fallen 15 percent from a year earlier.
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