Chinese steel market sources agree that domestic steel market prices will hover in a narrow range in February after the Chinese New Year holiday over January 24-30, predicting that supply and demand will be stable as cautiousness will prevail, Mysteel Global has learned.
Taking Mysteel’s HRB400 20mm dia rebar in Shanghai as an example, the benchmark price of this key long product is seen ranging between Yuan 3,600-3,800/tonne ($523-$512/t) including the 13% VAT, a steel trader based in East China’s Shandong province predicted.
As of January 15, the benchmark price was at Yuan 3,750/t, unchanged for nearly half a month since January 2, Mysteel Global noted.
“Steel prices are expected to first move up and then retreat after the CNY holiday, but the fluctuation will be small, limited to perhaps around Yuan 100-200/t,” he maintained.
Normally, China’s steel market will fully return to business after the Spring Lantern Festival, regarded by many market participants as the formal end of the Chinese New Year and which this year will fall on February 8, Mysteel Global understands.
“As a common trend, the price will pick up with the revival of demand after the holiday, but whether the increase lasts will depend on the pace of steel consumption,” the Shandong trader said. “I believe it won’t be too bad this year.”
An official with a steel mill in Central China’s Henan province agreed. “The market will neither be too good nor too bad,” he told Mysteel Global on Wednesday.
“Weather is an important factor. It will determine when and how quickly work on construction projects resumes and proceeds,” he said. “Recently, the weather has been pretty cool, which may be a good sign for demand after the holiday break,” he observed.
Market participants are also paying special attention to the upcoming event of China’s Two Sessions – the biggest political meeting of the year – on March 3 and 5 respectively, deeming that this will set the tone for market development in a later period.
“If the meetings set positive signals, the price may continue to move up – and vice versa,” the Shandong steel trader said.
While last year’s general pessimism over a slower economy and steel oversupply were not obvious this year, domestic market participants remained cautious, Mysteel Global’s canvassing showed.
“As we are not too sure about how the price will move after the holiday (so) we will control our stocks at a rather low level,” a steel trader based in Shanghai admitted.
Mysteel’s latest survey showed that Chinese steel inventories in 35 major cities totalled 10.2 MnT as of January 16, slightly lower than the 11.2 MnT as of January 31, the last week before CNY holiday last year.
This article has been exchanged under the ‘Article Exchange Agreement between SteelMint and Mysteel Global
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