Steel price to move up in near future – CISA

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Oct 2008

According to Mr Qi Xiangdong, deputy secretary-general of CISA said recently at a logistic meeting held in Tianjin Steel price trend in fourth quarter hinges on demand, and more on market confidence. Market panic about worldwide economy turmoil has accelerated the demand wane and contributed the sharp steel price fall since August. However, market balance remains healthy at home and abroad, therefore, steel price is to move up gradually in near future.

Mr Qi said in the meeting that steelmakers' pricing strategy and marketing has negatively impacted market stability, and quickened the price fall. Traders and end-users are walking away from the market, sending products stocks to a high level for steel mills. Meanwhile, mills' undersell also exaggerated market chaos since they have no benchmark ex-works pricing system. He said that "Mills are suffering over CNY 1,000 for per ton steel sell based on current sales prices and input costs, and steel sector is to suffer bigger losses in October. 32.4% out of total 71 large-and-medium steel mills have reported profit loss in September.�
Mr Qi said "To counter the chill market winter, steel mills should establish stable marketing system to protect their and trading houses' interest. A more scientific pricing system should be set up to stabilize market prices, and provide stable market expectation for traders and end-users."
To protect the wide price fluctuations, market balance should be restored. And Mr Qi thinks the market fundamentals in steel sector have not changed in the fourth quarter. China's crude steel production is estimated to stay at some 510 million tonnes this year given the monthly output of 1.32 million tonnes in September an increase of 20 million tonnes or 4.1% over last year. He said that supply surplus won't come given the over 9% domestic economic growth and 25% fixed assets investment expansion. And home supply tonnages will increase by merely 31 million tonnes or 7.1% even though export volume falls 11 million tonnes for this year.
Mr Qi said that "We should upbeat about domestic steel market. From long-run, China's urbanization and industrialization progress still hasn't finished yet, and a slew of supportive policies Beijing released recently will also help prop up steel price. Therefore, the current profit loss condition would not last long since steel prices will hold steady at a reasonable range when the market stabilizes resulted from the warming up of policies. Mr Qi also warns that price vibrations in a certain scope are normal given the market uncertainties.

Source: Modern Logistics News