Rebound is not reversal for Chinese steel market - Pessimistic players
Some buoyancy in steel futures along with small price rise in physical steel market in China has generated a debate that whether Chinese steel market will turn around for good and rather become very hot.
During discussions, it is observed that most of the steel mills are pessimistic about future of steel market in China.
According to most mills, this round of price rise is no more than a periodical rebound. The whole market condition is still gloomy and demand of the second half of the year will still be weak.
The optimist think that price of some steel products has fallen below cost line and the obvious inversion between factory price and spot price is a sign that the bottom price has already be hit by Chinese steel market. Therefore there will be no more room for steel price to fall further.
Besides, as pushed forward by the policy announced by the Ministry of Housing and Urban Rural Development to promote the construction of indemnificatory housing, the opinion is that Chinese steel market will turn for the better and Chinese steel price will enjoy big rise for a long period seems to be even more convincing.
Off season for demand
However, interviews of most of Chinese large steel enterprises have shown pessimistic mood toward this round of price rise based on the demand analysis of the future steel market.
Shagang steel is the biggest producer of construction steel in Chinese domestic market. One of its managers told that the previous plumrain weather had forced many construction projects to be stopped. Now it is out of plumrains, so it is naturally that some construction projects will start again and they will need construction steels. Thus the market will experience a temporary release of demand.
Meanwhile, the demand for construction steels is not strong enough to make the industry optimistic. The hot weather will keep the demand of construction steels in weakness in the future.
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