China Steel Price to Increase in Oct-Dec, NDRC

National Development and Reform Commission of China warns steel market price could increase in October-December when the supply gets tighter due to scrap of old steel making under strong public investment to develop western area. However, NDRC also reports the steel price increasing power could be canceled when building demand decreases seasonally in winter and Chinese government still tries to cool overheated real estate investment along with uncertain world economy.

Chinese averaged steel price was 4,593 yuan per tonne for concrete reinforcing steel bar, wire rod, plate and cold rolled flat steel in major 22 cities in January-September, which was 16.1% higher than the level in same per period of 2009. The price has been increasing since Chinese New Year Holiday in February due to major public investment for construction. The price reached 5,085 yuan in mid-April, which was 18% higher than the level in early February.

The price decreased 4,240 yuan per tonne in mid July, which was 19.9% lower than the peak in mid-April. The price decreased when the government tries to cool real estate investment and the steel export decreased under higher yuan exchange rate after the government terminated export tax return for some steel items in July.

The steel price increased by 9% to 4,704 yuan per tonne in September from July when steel production decreased with lower electricity supply to improve energy consumption efficiency and environmental damage control. The steel price decreases slightly recently due to higher interest rate policy. The steel price volatility increases when iron ore purchase price changes quarterly based on spot market price while the iron ore price was yearly fixed price.