[SMM Review] Post-Holiday Steel Prices May Extend its Upside Momentum

SHANGHAI, Feb 7 (SMM) - Steel prices were stable as a whole during the Chinese New Year (CNY) with slight increases. Among them, some blast furnaces mills in east and south China raised their offers by 30-100 yuan/mt during the holiday. As far as SMM understands, most steel mills in north China produced as planned during this period, and only a few suspended the production completely owing to strict production restrictions. The steel prices rose across north China amid concerns over the supply side.

On the demand side, domestic production is expected to resume steadily post the CNY holiday because the COVID-19 pandemic situation has been well contained when compared with the pre-holiday situation. While the expected snow in central and east China in February 6-8 will hinder the production recovery to some extent.

The steel prices are likely to extend its upside momentum into the post-holiday period on the ground of relatively optimistic market sentiment during the holiday.

The iron ore prices are likely to be regulated by the central government again, and the Winter Olympics-related production restrictions will pull down iron ore prices. The coke supply and demand pattern, meanwhile, is expected to weaken, which may pull back the coke prices. As such, the cost side is expected to be sluggish after the holiday, dragging on the upside potential of finished products prices.