Chinese GDP growth was 7.7% in Q1, 7.5% in Q2 and 7.6% in H1, as per statistics released by National Bureau of Statistics on July 15. The figure prods upbeat in shares, rise in steel futures and electronic board, which hence drives up steel spot price.
Despite a rebound for consecutive two weeks, steel price lacks momentum for further jump.
Steel inventory continues to drop in the marketplaces
China steel market shows positive signals since late June and dominant contract 1401 close at 3656 yuan per tonne. Steel spot price rises for the second straight week and some steel mills announce to raise their ex-works prices.
On July 15, 2013, ?20mm HRB400 rebar average price at domestic large cities was 3511 yuan per tonne, an increase of CNY 15 per tonne versus prior Friday; 6.5mm high speed wire rod average price hit CNY 3488 per tonne, up CNY 13 per tonne compared with July 12; 5.5mm HR coil average price reached CNY 3613 per tonne, rising CNY 13 per tonne from last Friday.
Steel inventory totaled 14.9785 million tonnes at domestic 29 cities on July 12, 2013, down 333,100 tonnes or 2.18% from last week.
Despite that steel mills haven't cut down production, Shagang raised rebar ex works prices by CNY 80 per tonne and wire rod prices by CNY 120 per tonne on July 11.
Crude steel production sustains high
China steel market might be prodded to go up in a short term in view of favorables factors such as urbanization. However, how high the rebound might be should depend on production cut amid steel mills considering oversupply in dull consumption season.
As per statistics from National Bureau of Statistics, China produced 64.66 million tonnes of crude steel in June, up 4.6% year on year. Daily crude steel production was 2.155 million tonnes, down 0.3% month on month. It continued to stay high despite a drop for consecutive two months. Crude steel production for Jan.-Jun. totaled 389.87 million tonnes, an increase of 7.4% year on year. Daily crude steel production was 2.154 million tonnes in H1 with annualized rate predicted to be 786 million tonnes.
An insider said that although economic recovery props up market sentiments, steel price lacks momentum for continuous hike and it is likely to undergo fluctuation on overcapacity.
China steel market is expected to go up if leading steel mills such as Ansteel, Benxi Steel, Hebei Steel and Shougang slightly raise their ex-works price or keep stable. Moreover, government policy following the release of economic figures should draw concerns.