May and June are traditionally the time when Chinese steel producers and traders empty their stockpiles, but not this year. Although steel products prices have been moving up for several straight weeks, May inventories are far higher than records for the same period in history.
China’s domestic steel market has been growing for six consecutive weeks with leading steel mills pushing up ex-works prices especially in the wake of the first settlement of iron ore contract prices for fiscal 2009 between iron ore miners and Japanese and Korean steel producers.
By the end of May, Angang, Benxi Steel, Hebei Steel, Shagang and other domestic big steel mills had increased ex-works prices for June deliveries by CNY 50 per tonne to CNY 150 per tonne. Amid these adjustments, the gains for construction steel products are the most highlighted.
One trader told the Economic Information Daily that "Market demand should have been the most blooming in May and June during which time inventories lost most rapidly. But in terms of the current situation, things look black in steel transactions in spite of rising prices. It may get further worse when it turns into the low season for the steel market.”
According to a report in mid-May from the China Iron & Steel Association, daily production of crude steel reached 1,478,000 tonnes, only slightly less than the highest February figure. It is expected that crude steel output this year will be 539 million tonnes, an increase of 79 million tonnes from the slated 460 million tonnes in the start of the year.
Source: Steel Guru
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