China's Ministry of Commerce (MOC) has announced that domestic prices of construction steel dropped by 0.4 percent week on week in the week from December 27, 2010 to January 2, 2011, following consecutive increases in the five previous weeks. During the week in question, prices of 6.5 mm high speed wire rod and 25 mm rebar dropped by 1.1 percent and 0.5 percent respectively, according to the MOC.
The factors behind the decrease in Chinese domestic construction steel prices include supply, as more steelmakers have increased their outputs. According to the China Iron and Steel Association, in mid-December last year (Dec. 11-20) the daily output of crude steel in China reached 1.677 million mt, up 4.5 percent month on month. Another factor is decreasing demand. As China's Spring Festival approaches, activity on construction projects in China has slackened. Increasing inventory levels constitute a third factor. However, high costs of iron ore and coke continue to provide support for steel prices, and so it is thought that domestic construction steel prices will likely follow a stable trend in the coming period.