Chinese spot steel prices fell 4.7% this week in a second consecutive weekly fall, ending a two-month rally, as increased production in the absence of strong demand depressed prices.
China is the only major market where spot steel prices have risen in recent months, spurred on by a government spending plan of nearly USD 600 billion, but it is now joining other markets as demand remains weak.
One Chinese trader said "Actual demand remains very depressed and inventory is building up again price gains so far appear to be driven by recovery expectations, which have yet to materialize" whilst another trader commented that "near panic conditions" seem to be prevailing in spot markets as the usual post-Chinese New Year demand has failed to materialise.
China recently boosted output, encouraged by the government spending plan and by increased imports of iron ore, driving global ocean freight rates, but the rally, which boosted prices by more than 30% between late November and the first week of February, when China returned from a week-long Lunar New Year holiday, has fizzled out in the absence of strong post-holiday demand.
Source: Steel-Prices
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