Steel Prices To Extend Declines In May As Demand Shock Is Much Bigger Than Supply Reduction

SHANGHAI, May 11 (SMM) - End users were still cash-strapped in April, especially in real estate and infrastructure sectors. The rainy season hindered construction activities. As a consequence, steel prices went down last month, with the average price falling 183 yuan/mt MoM. HRC (-232 yuan/mt), rebar (-267 yuan/mt) and wire rod (-279 yuan/mt) led the decline.

In May, the rainy season will take a toll on steel demand in the construction sector. The overall downstream demand will slow down. Despite rumours of steel mills cutting output in many regions, the actual reduction was limited. Considering that demand will fall more sharply than supply, steel prices will extend declines.