Future seems dim for Chinese steel market

SteelOrbis Shanghai Chinese government is imposing new macro-control measures which will curb the demand for steel products. The macro-control measures may even include putting a cap on the steel products prices, setting an invisible upper limit, so the increase range of steel products prices will be limited. In addition, Europe is to enter into summer vacation with less demand on steel products. US and Middle East markets maintain the brisk demand, but because of the high prices, the customers express their dissatisfaction. Consequently, hot rolled product purchase prices in the US have remained unchanged for three weeks. On the other side, Chinese steel production is in an accelerating growth trend. Through the first five months, Chinese crude steel production increased 18.6 percent year on year to 163 million metric tons, while the daily production was 0.9731 million mt/day in January, 1.0159 million mt/day in February, 1.0609 million mt/day in March, 1.1237 million mt/day in April, and 1.1592 million mt/day in May. The production is expected to maintain such a rapid growth rate in the future. With the restrained domestic demand, less international demand and rapid production growth, Chinese steel market price trend is to be reversed. An overall decrease before the end of European summer vacation and their reentry into the market is expected. And it is to be seen whether the repurchase from Europe after the vacation will change the Chinese market trend.