Steel prices in China gains for straight 14 weeks

25mm rebar 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 record high of this year and pressing the averaged CNY 4091 per tonne of last year. Observations show that this rise, starting from mid April has lasted for fourteen weeks.

This rise was strongly driven by the government 4 trillion 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 keeps beating record of this year 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 specializing in construction steel raised prices tentatively in May early. Large and medium sized makers like Baosteel, Baotou Steel and Hebei Iron and Steel Group, started launching price correction for June deliveries further fueling small ones to follow hot on their heels.

Differently, 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. And the 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 short time, potently affected by the deadlocked ore talk between Chinese steel makers and three global ore suppliers.
Insiders analyzed 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 rise.

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