Steel price to come under pressure amid growing production and stock

It is reported that the spot and futures prices walked in two directions in the domestic steel market last week and the crude steel production kept expanding amid global cut, translating to increased stocks in the major steel varieties.
Market monitoring shows that steel spot price continued going up when the futures' sagged last week. In specific, construction steel climbed slightly with that in Hangzhou and Taiyuan gaining more than CNY 100 per tonne; medium plate price saw more notable rise of some CNY 200 per tonne in Beijing and Tianjin; HRC picked up substantially; CRC spotted average rise of CNY 100 per tonne while the large and medium-size section inched up.

On construction steel, 31 rebar producers and 25 wire rod maker adjusted ex-factory prices and there was some signs that billet selling went under strain. Meanwhile, most of the steelmakers resumed operation in early June suggesting the construction steel price will be under pressure of falling in future.

On medium plate, five manufacturers raised their ex-w price up, with Anyang Steel, Jinan Steel, Shaoguan Steel and Liuzhou Steel all lifting at least CNY 50 per tonne. Yet further rise may be hard with increasing pressure of stock.

CR and HR coil prices surged in general with the former posting bigger rise. During the week, 8 HRC makers pushed the price up, but stocks in the major markets like Shanghai has kept swelling for three weeks. Plus new HR capacity coming on stream the price risk is also heating up.

Amid constrained global production, Chinese steel output remains growing, citing 0.4%YoY growth in the first five months and as high as 46.46mt in May alone. This has been reflected in steel stocks, eg HRC advanced 42% or 700,000 tonnes YoY at end of May, medium plate gained 250,000 tonnes or 26% and construction steel, 380,000 tonnes or 10%.

(Sourced from MySteel.net)
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