China's National Business Daily has reported that to July 20th the price of 25mm rebar was posted at CNY 4090 per tonne in Beijing, a hike of CNY 110 per tonne from last week and of CNY 370 per tonne from a month ago, hitting a record high for the year and pressing the average of CNY 4091 per tonne of last year. This rise, which began in mid-April, has lasted for fourteen weeks.
The rise was strongly driven by the government's 4 trillion yuan investment stimulation, but out of expectation is that the price is moving up so rapidly, even in such a traditional low season in July and approaches the average level of last year.
An official of a construction steel company said the recent price rise is mainly pushed directly by steelmakers' scaling up EXW prices.
Medium- and small-sized steelmakers specialising in construction steel raised prices tentatively in May. Large- and medium-sized makers like Baosteel, Baotou Steel and Hebei Iron and Steel Group, started launching price corrections for June deliveries further fuelling smaller mills to follow hot on their heels.
This round of price improvement is deeper than usual with a range of as high as CNY 100 per tonne each time and even beating CNY 500 per tonne for August delivery. The latest report with Mysteel.com shows that domestic supply and inventory of flat are staying at a high level. HR makers rate of operation has reached 90% and order prices for August deliveries are all above CNY 4000 per tonne.
The cost growth is considered to be the main cause for the steel price hike. The iron ore spot price has surged CNY 100 per tonne plus in a short time, affected by the deadlocked ore talk between Chinese steel makers and three global ore suppliers.
Insiders analysed that it is about time for the market to come back to a normal level taking account of the low season and the prolonged cycle for steel price rises.
Source: Steel Guru
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