China Steel Price Index Rebound with Steel Still Oversupplied, Association

BEIJING, June 19 -- China's composite steel price index edged up 2.58 points from April to 98.14 points at the end of May, marking the first growth in the latest three months, according to statistics released by China Iron and Steel Association (CISA).

    However, the figure still stands 58.72 points, or 37.43 percent, lower than one year prior.

    Among major steel products, prices of construction steel rods kept rising. Steel sheet prices rebounded, while steel pipe prices continued to drop, though only slightly.

    The prices of wire rods and steel screws increased 170 yuan/ton and 182 yuan/ton, or 5.11 percent and 5.24 percent, respectively. Hot-rolled steel plate prices went up 157 yuan/ton, or 4.54 percent. Prices of medium plates, cold-rolled steel sheets and galvanized sheets each respectively rose 2.37 percent, 2.52 percent and 2.74 percent. Hot-rolled sheet prices inched up 1.74 percent, while seamless steel tube prices edged down 1.15 percent.

    By the end of May, China's inventory of major steel products had undergone a month-on-month decline for three months running, indicating a growth in steel consumption. Construction steel rod inventory fell sharply.

    That of wire rods and steel screws decreased 5.59 percent and 14.81 percent, respectively. Inventory of medium plates and cold-rolled steel sheets went down 5.41 percent and 1.61 percent, while hot-rolled steel plate inventory stacked 1.89 percent higher.

    The international price of steel also rebounded in May, putting an end to the continuous decline featured over the previous three months. By end-May, the CRU Steel Price Index reached 129.9 points, up 3.4 points from April, but down 138.1 points from one year earlier.

    This rebound was attributed by CISA to a series of stimulus packages the government has launched over the past months.

    The association also warned that international steel demand is still weak, since it's hard for the world economy to escape a recession in the near term amid the global financial crisis. Chinese steel enterprises still face many challenges such as excessive capacity, plunging exports, increasing imports, rising raw material prices and bolstered trade protectionism across the world.

    The CISA suggested that steel enterprises accelerate the elimination of backward capacities and control excessive capacity growth so that the market can reach its equilibrium.

    China's Composite Steel Price Index is the most important steel price index in China. Its 100 point basis was set in April 1994 when it was first published.

    (Source: chinamining.org)