Aug 17 2010
Frbiz.com, one of China's leading B2B search platforms, analyzes the change in China's steel prices.
Since late July, China has experienced a sudden rise in steel prices. This rising trend is continuing, and steel prices have gone up almost 1 percent.
The steel market is definitely experiencing a rebound, but a price inversion phenomenon exists on the market. The wholesale price of steel is actually higher than the retail price, and dealers looking to maintain good relationships with customers are losing substantial money.
Current steel sales have not increased, and temporary price differences have not yet turned huge profits or losses. Customers are on building sites but consumption is actually declining, in part due to the hot weather.
This is consistent on China's macroeconomic level. According to Bureau of Statistics data, January-July's urban fixed asset investment year-on-year grew 24.9% while the growth rate was down 0.6 percentage points in the first half. July's industry value added growth rate decline was slightly better than in June.
The sustained rebound in the steel market is due to multiple factors, but mainly for two reasons: one is the former steel price recognized by the market, which creates an atmosphere for bargain-hunting steal purchasers. Second, three-quarter iron ore prices have risen, and the cost has forced an increase in steel price. Customs statistics show that the average price for iron ore imports in July was 141.4 U.S. dollars, which rose 1.6 U.S. dollars more than in June.
Steel prices have risen one or two hundred RMB within a week or even 100 RMB in a day, indicating that there is definite speculative market behavior.