Asia Steel-China Prices up 3% on Traders' Restocking-Shanghai Metals Market

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Asia Steel-China Prices up 3% on Traders' Restocking

Data Analysis 01:16:23PM Dec 07, 2009 Source:SMM

SEOUL, June 25 -- Chinese spot steel prices rose nearly 3 percent this week to a four-month high, as expectations that steady gains in raw material prices would keep prices high led to some restocking activity among traders.

    Prices of China's benchmark hot-rolled coil rose 2.9 percent to a four-month high of 3,620 yuan ($530) a tonne, versus 3,515 yuan quoted last week in south and east China, data from Metal Bulletin showed.

    "Order inquries have picked up: Some of them are linked to real demand recovery and others are restocking activity, betting prices would rise further," said a Chinese steel trader.

    "Export prices also held firm, despite China's recent move to raise export tax rebates on some steel products, as rising domestic prices discouraged traders from shipping products overseas at a discount."

    Encouraged by firm prices, Chinese mills are cranking up production, keeping annual output at 9 percent higher than a year ago.

    China's daily crude steel output stood at 1.498 million tonnes in the first 10 days of June, equivalent to annual output of 547 million tonnes, compared with 500 million tonnes produced a year ago, data from the China Iron and Steel Association showed.

    "Demand in China appears to be strengthening... Construction volumes are slowly picking up and the property sector is showing signs of life. This would be positive for overall steel demand," Macquarie analyst Andrew Dale said on Wednesday.

    "Steel prices in China have risen by 16 percent from their lows (in April). This is important because in a market with so much perceived capacity, one would have thought prices might be softer. Raw material prices have also increased so this might explain some of the pricing strength."

    Spot prices of iron ore to China also rose to a four-month peak of $77.50 a tonne amid growing prospects that China will fail to finalise a long-term supply contract deal with big miners before the end-June deadline.

    If there is no deal by next Tuesday, a deadline set by Rio Tinto (RIO.L) (RIO.AX), it could stop contractual sales and instead negotiate prices on a cargo-by-cargo basis -- a big gamble for China, which is now importing about half of the world's traded iron ore.

    Reflecting improving regional market outlook, South Korea's POSCO (005490.KS) also raised domestic prices of stainless steel products by 10 percent to 2.8 million won ($2,178) a tonne, reversing part of price decreases it made just a month ago, to reflect soaring nickel prices.

    Nickel prices jumped to over $15,000 a tonne from below $10,000 in February, boosted by declines in LME stocks and spreading optimism across the base metal complex.

    "Restocking needs from auto and electronics industries are also contributing to rising stainless steel demand," said Park Wan-sun, a JP Morgan analyst said.

    In Japan, where crude steel production tumbled earlier this year to the lowest level since 1968, some "green shoots" of recovery have emerged.

    Its crude steel output rose 13 percent in May from April as demand from makers of cars and household electronics edged up and Nippon Steel (5401.T) expected its capacity run rate to rise to nearly 70 percent in July-September quarter from around 55-66 percent currently.

    Japanese traders are also seeking to raise export prices of hot-rolled coil in the third quarter to around $510 a tonne from $420-430 quoted in the second quarter, traders said.

    "We see signs that steel prices are firming in many parts of Asia, after moving in a range of $470-$550 a tonne since October," Nomura analyst Cindy Park said.

    (Source: Reuters)

 

Asia Steel-China Prices up 3% on Traders' Restocking

Data Analysis 01:16:23PM Dec 07, 2009 Source:SMM

SEOUL, June 25 -- Chinese spot steel prices rose nearly 3 percent this week to a four-month high, as expectations that steady gains in raw material prices would keep prices high led to some restocking activity among traders.

    Prices of China's benchmark hot-rolled coil rose 2.9 percent to a four-month high of 3,620 yuan ($530) a tonne, versus 3,515 yuan quoted last week in south and east China, data from Metal Bulletin showed.

    "Order inquries have picked up: Some of them are linked to real demand recovery and others are restocking activity, betting prices would rise further," said a Chinese steel trader.

    "Export prices also held firm, despite China's recent move to raise export tax rebates on some steel products, as rising domestic prices discouraged traders from shipping products overseas at a discount."

    Encouraged by firm prices, Chinese mills are cranking up production, keeping annual output at 9 percent higher than a year ago.

    China's daily crude steel output stood at 1.498 million tonnes in the first 10 days of June, equivalent to annual output of 547 million tonnes, compared with 500 million tonnes produced a year ago, data from the China Iron and Steel Association showed.

    "Demand in China appears to be strengthening... Construction volumes are slowly picking up and the property sector is showing signs of life. This would be positive for overall steel demand," Macquarie analyst Andrew Dale said on Wednesday.

    "Steel prices in China have risen by 16 percent from their lows (in April). This is important because in a market with so much perceived capacity, one would have thought prices might be softer. Raw material prices have also increased so this might explain some of the pricing strength."

    Spot prices of iron ore to China also rose to a four-month peak of $77.50 a tonne amid growing prospects that China will fail to finalise a long-term supply contract deal with big miners before the end-June deadline.

    If there is no deal by next Tuesday, a deadline set by Rio Tinto (RIO.L) (RIO.AX), it could stop contractual sales and instead negotiate prices on a cargo-by-cargo basis -- a big gamble for China, which is now importing about half of the world's traded iron ore.

    Reflecting improving regional market outlook, South Korea's POSCO (005490.KS) also raised domestic prices of stainless steel products by 10 percent to 2.8 million won ($2,178) a tonne, reversing part of price decreases it made just a month ago, to reflect soaring nickel prices.

    Nickel prices jumped to over $15,000 a tonne from below $10,000 in February, boosted by declines in LME stocks and spreading optimism across the base metal complex.

    "Restocking needs from auto and electronics industries are also contributing to rising stainless steel demand," said Park Wan-sun, a JP Morgan analyst said.

    In Japan, where crude steel production tumbled earlier this year to the lowest level since 1968, some "green shoots" of recovery have emerged.

    Its crude steel output rose 13 percent in May from April as demand from makers of cars and household electronics edged up and Nippon Steel (5401.T) expected its capacity run rate to rise to nearly 70 percent in July-September quarter from around 55-66 percent currently.

    Japanese traders are also seeking to raise export prices of hot-rolled coil in the third quarter to around $510 a tonne from $420-430 quoted in the second quarter, traders said.

    "We see signs that steel prices are firming in many parts of Asia, after moving in a range of $470-$550 a tonne since October," Nomura analyst Cindy Park said.

    (Source: Reuters)