Steel prices strengthened, Profits of steel mill further improved

On the raw material side, last week saw a gentle dip in steel costs, with mild iron ore price erosions and narrow fluctuations of coke and steel scrap. On the finished product side, stimulated by good macro and industrial news, steel prices appeared bullish last week, and profits of steel mills improved. In the future, short-term raw material prices are unlikely to fall significantly. Moreover, rising supply and muted demand will probably leave steel prices with limited room to hike further in a short run. It is expected that profits of steel mills will continue to improve this week, but to a limited extent.