How Will the Steel Prices Change amid Production Cuts of Steel Mills and Overseas Interest Rate Hikes?

SHANGHAI, May 4 (SMM) - At the beginning of last week, steel prices declined sharply, which trigged panic among the market players. In this scenario, leading steel mills of Northwest United Iron and Steel Co., Ltd. implemented production reduction, which dragged down the prices of iron ore and coke. The transactions in the spot market remained sluggish, and the pre-holiday stocking demand failed to boosted the prices. As the weekend approached, the steel prices stabilised at a low level and terminal demand increased.

Post the Labour Day holiday, the meeting held by the Political Bureau of the Central Committee may boost the market, but the overseas Fed’s raising interest rates may bring about a negative impact. In terms of fundamentals, with the first round of production cuts completed, the decline in the supply may slow down in the short term. After the Labour Day holiday, steel mills may have restocking demand, which will drive up the prices of raw materials in the short term. Steel prices may remain volatile as the decline in costs slows down. The profits of HRC are expected to be lower than rebar in south China as local production cut of rebar is more significant. The expectations of improving profits of rebar and the slight impact of rainy weather on the demand for HRC may widen the price spread between HRC and rebar in May.