Production decline curbed price decrease

Tuesday, 15 August 2006 10:58:42 (GMT+3)   -  
SteelOrbis News

SteelOrbis Shanghai The latest figures released by China Iron & Steel Association (CISA) indicated that China's both rebar and wire rod production decreased month on month in July. This production decline is also one of the reasons that caused the prices in China to become stable towards the end of July. Although rebar production in July increased 11.9 percent year on year to 6.8 million metric tons, the daily production was indicating a 6.96 percent decline from the 235,400 metric tons in the previous month to 219,000 metric tons. Similarly, wire rod production also increased 24.7 percent year on year to 6.252 million mt, while the daily production decreased 4.35 percent from 210,700 metric tons in June to 201,600 metric tons in July. Chinese long products prices continued to see a minor increase with fluctuations throughout last week. In spite of the low trading volume, the price pressure is slight due to the decline in the market inventory. On August 11, the average price of 20 mm diameter HRB 335 rebar in the three major markets of China; Shanghai, Beijing and Guangzhou increased RMB 17/mt ($2) week on week to RMB 2,990/mt ($375), and that of 20 mm diameter HRB 400 rebar increased RMB 10/mt ($1) to RMB 3,107/mt ($390). The average price of 6.5 mm Q235 high speed wire rod increased RMB 26/mt ($3) to RMB 3,203/mt ($402). On August 5 and 6, China's Ministry of Construction and Ministry of Land and Resources published two documents respectively: “Strengthening the Control over Real Estate Market and Promoting the Healthy Development of the Real Estate Industry”, and “Reinforcing the Supervision on Land and Dominating the Land Supply”. The publication of these two documents indicate that the government will further carry out forceful measures to strengthen the control and supervision over land and real estate market, which may suppress long steel market in the future. Therefore, although the market players think that there will be a price rise, they are pessimistic about the increase range. It does not seem quite possible for the market prices to surpass the highest level of the first six months.

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