China Steel Demand Seen Still Growing in Q2 - CISA

SHANGHAI, May 18 - Steel demand in China is expected to keep growing in the second quarter while steel output will continue to rise, the China Iron & Steel Association said.

"The second quarter is a peak consumption period for steel products. Thanks to steady economic growth, the demand for steel products will keep growing," it said in the statement posted on its website (www.chinaisa.org.cn).

Investment in property and new construction projects is expected to stay at a high level throughout the year, lending support to steel demand, CISA said.

But fast growth in steel output, as well as measures taken by the government to tighten liquidity and prevent inflation, may affect steel prices, CISA said.

Higher prices of iron ore, coal, coke and power, in addition to increasing transportation costs, are expected to support steel prices, the association said.

But Chinese steel prices have been falling for the last few weeks. China's biggest mills kept product prices stable for June and at least one mill cut prices on concerns that demand might weaken in the second half of the year.

Steel product inventories fell by 10.8 percent from a month earlier to 15.43 million tonnes by end April, CISA added.

Exports of steel products may improve this year, thanks to recovering demand in global markets, CISA also said.