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SteelHome
hosted the 17th Steel Saloon Conference in
Shanghai
on February 25, 2010. SteelHome addressed the saloon on major points of
current steel market.
China
steel market after Spring Festival Holiday will continue to see high
production, lofty inventory and low steel demand.
Lofty
inventory restricts growth rate of spot market but on the other side, it
helps stabilize spot price. However, rising transaction cost restricts the
downfall room of steel price. Steel demand around 2010 spring festival is
better than the prior year. Downstream demand will be gradually released
as central government is adjusting and improving the structure of credit
loans. Lofty inventory will gradually be consumed when steel demand is
releasing.
There
is slim chance for steel market to dive further as current price level is
in the bottom range. Generally speaking,
China
steel market is lacking of momentum to rebound and has no further room to
slide right now. The second quarter will see higher price than previous
lows and a round of price hike in line with inventory consuming.
Many
participants also expressed their points of view on the saloon.
Cai
Peigen, General Manager of Shanghai Aotai, believed that iron
concentrates and coke supply fall short under current 1.55 million tonnes
per day of crude steel production. Metallics supply would become shorter
as crude steel production rise in line with higher demand. Operating cost
for steel mills would increase further. Mr Cai said that lofty inventory
can just restrict growth rate of steel price, but it can not prevent the
upward trend.
China
steel market would surge as long as steel demand erupt.
Yue
Lianyuan, Shanghai Minwei, brought forward his points, first, inflation
may not occur in 2010; second, the volatility of China steel market will
be within CNY 1000-1200 per tonne; third, China steel market will show a
distinct trend after mid-March, and most probably upward trend.
Li
Mingjie, Manager of China Perfect, revealed that S Korea and
Japan
uplifted export quotation to
China
after Spring Festival, and some high value-added products are raised even
USD 200 per tonne due to improving demand of Asian markets. Their products
would be shipped to
China
in April. The high-priced imported steel will drive up domestic steel
market. Li believed that
China
steel market would maintain stable in March, and massively rise in April
and May.
Liang
Xingdong, President of Anshan Xingdong, expressed his views more directly and
distinctly that China HRC price would rise to CNY 4800-5000 per tonne
before June.
Wu
Wenzhang, President of SteelHome website addressed the conference a
key-note speech on current market.
First,
although lofty inventory restricts the growth rate of steel price, it also
help stabilize market price. Consecutive rise in marketplace inventory
means a decreasing supply and price may go up; if marketplace inventory
drop, supply increase and price may go down. Briefly speaking, high
inventory is in line with high price and mostly low inventory is in line
with low price.
Second,
rising transaction cost prevent steel price from further sliding.
Australian dollar and Brazilian real rise 20%-30% due to devalue of US
dollar. Global crude oil, domestic coal, electricity and transportation
cost rise generally, therefore, the transaction cost, not only steel
mills¡¯ operating cost hike in 2010, and we conservatively estimate that
the bottom of steel price in 2010 will be CNY 500 per tonne higher than
that of 2009.
Third,
as macro economic policies are not clear right now, market players are
waiting and holding on hands, which to some what restrict the unleash of
steel demand. As 2010 is the last year in the ¡°eleventh five-year
plan¡±, all projects involved in the Plan should be finished this year,
which guarantee a high speed of growth of steel demand in 2010.
Fourth,
loan structure is significantly improved this year, and most of money is
flown to real economy. Crude steel demand will rise at least 10-12% year
on year in 2010.
China
steel market lack of momentum to rebound and it also has no further room
to slide. The upward trend will occur around May unless Euro-zone clasps.
The
Conference
Wu
Wenzhang President of SteelHome website
Cai Peigen, GM of Shanghai Aotai
Yue Lianyuan, Shanghai Minwei
Liang Xingdong, Anshan Xingdong
Li Mingjie, China
Perfect
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