SHANGHAI, Mar 14 (SMM) – Demand in the Chinese steel market is likely to rebound from mid-March as downstream consumers resume production, an SMM survey of 50 construction sites and traders showed. Steel prices have fallen 200-300 yuan/mt as demand recovered slower than expected and inventories accumulated after the Lantern Festival on March 2.
Transactions were brisk in east and south China this week as more construction sites resumed operation. Between March 10 to March 12, inventories declined 60,000 mt, SMM calculated.
In south China, steel prices remained firm though some sellers were keen to destock cargoes at lower prices. Prices held steady as the gradual pick-up in downstream consumption gave support to the market.
Operations were affected in north China as the two political sessions, Chinese People's Political Consultative Conference (CPPCC) and the National People's Congress (NPC), slowed the recovery of consumption. But traders remained upbeat on consumption after March 20, when it is estimated that operations will resume.
Some construction enterprises also faced financial pressure as China tightened its credit policies to ease the property bubble. Higher prices of raw materials and a shortage of steel benders at work sites also accounted for the slow resumption of downstream consumption for steel.
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