The recent rise in prices of steel products on China’s spot market has given rise to the view that the low point in the steel market has been reached. However, the macro control policy on the property market and the capacity control in the iron and steel industry still weigh on domestic steel prices.

According to a survey of 46 steel mills and 133 steel traders in 15 cities, the outlook on the price of the steels in the future is optimistic and there is a belief that steel prices will continue to rise.

Judging from the prospective of the recovery of the country’s Purchasing Managers Index (PMI), waning influence of the European debt crisis on the global economy and the good news for the domestic economy, the country’s macro-economy was tending to stabilize amid moderation.

Also, with the weather turning warmer, the demand for steel products has started to pick up, with commercial stockpiles continuing to decline moderately, which has to some extent eased the glut in steel inventories.

Capacity utilization remains at a relatively low level at present, but output had started to rise slightly, showing an improvement in market sentiment.

Even so, the demand from the downstream sectors was not obvious and trading volume was still thin. In the near term, prices of imported iron ores will continue to fluctuate upward in a narrow range.

Source: China Metals e-mail