SHANGHAI, Dec. 5 (SMM) -- Steel demand from construction industry continued to weaken last week. As of last Friday, operating rates at construction companies fell, and construction in Northeast and West China has been generally completed, and many companies have not built inventories for 2012 operations. Overall steel demand in South China also turned weaker due to weather factor. However, the Ministry of Housing and Urban-Rural Development began to conduct a new round of checks on the affordable housing starts, and the checks will be finished in late December, so the progress of some unqualified affordable housing projects accelerates. Cash flows remained tight last week, and China’s cut in the banks’ reserve requirement ratio (RRR) could not be felt by property sector in the short term, but such move still had positive impact on market sentiment. Construction steel prices were unchanged last week, and according to the Steelease survey, construction companies generally say they will consider building limited inventories during the remainder of 2011 given lower operating rates caused by cold weather. Therefore, Steelease believes construction steel prices will continue to fluctuate lower in the short term.
Spot steel prices fluctuated narrowly last week, with billet prices making strong gains supported by costs. China’s RRR cut has limited impact on steel markets, and companies remain cautious. Although the construction of affordable housing projects accelerates, overall demand for construction steel continues to weaken. In this context, Steelease predicts steel prices will remain weak in the short term.