SHANGHAI, Nov. 15 (SMM) -- Recently, the People's Bank of China (PBOC)’s relatively eased monetary policy resulted in slightly sufficient money supply, and steel prices also stabilized and even rebounded. Average prices for most steel products were up in recent two weeks, but Steelease believes the steel destocking has not finished and many negative factors for steel prices are still existent.
First, downstream demand did not improve. The Steelease PMI of steel downstream industries remained below 50% during October, a signal of weak orders in manufacturing and construction sectors.
Second, the Chinese government’s property curbs remain stringent. Chinese Premier Wen Jiabao said recently that property price curbs are China’s firm policy. In this context, the investment in commercial housing is expected to fall in the future.
Third, international economic conditions have not improved fundamentally, and concerns over the European debt crisis continue.
In summary, Steelease believes recent steel price rally is only a result of China’s slightly eased monetary policy in the short term, and steel prices will likely fall in the medium and long term.