Steel Stock over multimillions of tons in China It may Cause Slump of Steel Price

Resource from: CBCC Likes:2887

Dec 28,2009

Up to Dec. 11th, the social steel stock in the main cities in China has reached 11.57 millions tons, which increased 109% on a year-on-year basis. The steel stock ought to decrease in the low season, but it has increased successively for four weeks. What’s the reason for the large stock? The analyzers took thought that 11.57 million tons of social stock of steel will influence the steel price in the whole year a little, but if the credit policy changes and the market confidence fluctuation, it will be the inducement of the slump of steel price in short time. The analyzers thought that the total steel stock in China will be from 70 million tons to 80 million tons at the end of 2009, which is higher than that in 2008 (20 million tons to 30 million tons). Once there is any chance in the market, the large stock will be likely to become the fuse of the slump of steel price in short time. The traders started to stock steel one month before the Spring Festival in 2009 and prepared for the spring market next year. The final result is that on Dec. 16th, that is the second week after the Spring Festival, there will be panic slump in the steel market and the slump will last out to April. The average slump rate of steel price will be 20%. A large group of traders who speculated on a rise will get nothing. In the late 2009, the steel price in China displays fluctuating slump trend in phases. It is predicted that the output of crude steel in China will break through 700 million tons. Obviously, the huge output will bring great pressure on the increase of steel price and the steel price in China is likely to keep on a reasonable level. The traders thought there will be inflation next year, but the fact that there is still risk is an open secret.

(CBCC)

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