Thu Mar 17, 2011 7:29am GMT
* Steelmakers and traders eyeing Japan quake
* Steel demand likely to take longer time to recover
By Ruby Lian and David Stanway
SHANGHAI, March 17 (Reuters) - Spot steel prices in China remained steady this week, with traders still assessing the impact of the Japanese earthquake on the steel market, as well as a move by top steel mills to keep prices for April unchanged.
Rebar, mostly used in the construction sector, rebounded modestly to 4,580-4,590 yuan ($697-698) per tonne on Thursday, down 10 yuan from last Thursday after slipping nearly 2 percent at the beginning of the week, industry consultancy Mysteel said.
The catastrophic earthquake and tsunami in Japan have further weighed on the global steel market, adding to concern about weak demand brought about by tighter credit and lower iron ore prices.
"Most market players are still assessing the aftermath of Japan's earthquake, while steel mills are watching the crisis closely and are hesitant to make offers, although prices have bounced back slightly," said Bill Chen, a senior trader with Hong Kong-based Smart Timing Steel Ltd.
Key Japanese steelmakers have halted operations at some of their facilities since Monday because of power outages brought about by the quake.
Luo Bingsheng, former vice-chairman of the China Iron & Steel Association and now an advisor, said at an industry conference on Thursday that Japan's post-quake reconstruction would eventually lift global steel prices and benefit Chinese steel exports.
His speech was made available on the organiser's website (Umetal.com).
The most active rebar contract on the Shanghai Futures Exchange recovered this week to 4,817 yuan per tonne, up 2.9 percent from last Thursday.
DEMAND RECOVERY STILL SLOW
Two of China's biggest steelmakers, Baoshan Iron & Steel Co Ltd and Wuhan Iron & Steel Co Ltd said this week that they would keep their main product prices stable for April, reflecting their concern about tepid demand and high stockpiles.
Demand is expected to pick up in the second quarter as end users normally return to the market to restock, but government moves to further tighten liquidity are likely to curb the recovery.
"We believe steel prices will stay at a low level for a month or two -- a rebound is unlikely because of strong supply and lukewarm demand," said Henry Liu, a commodities analyst with Mirae Asset in Hong Kong.
CISA's Luo also said the inventories of 78 medium-sized and large steel mills surged 20 percent over the first two months of the year, and some steel mills would likely suffer losses.
Inventory building by end users was unlikely to continue, and even if steel prices rebounded they were not expected to return to their February high, Liu said.
In its monthly market report published on Thursday, CISA said stockpiles remained high going into March, and that prices would be put under further pressure as a result of still excessive output levels and increases in raw material supplies. $1=6.571 yuan) (Editing by Chris Lewis, Reuters)
Rebar, mostly used in the construction sector, rebounded modestly to 4,580-4,590 yuan ($697-698) per tonne on Thursday, down 10 yuan from last Thursday after slipping nearly 2 percent at the beginning of the week, industry consultancy Mysteel said.
The catastrophic earthquake and tsunami in Japan have further weighed on the global steel market, adding to concern about weak demand brought about by tighter credit and lower iron ore prices.
"Most market players are still assessing the aftermath of Japan's earthquake, while steel mills are watching the crisis closely and are hesitant to make offers, although prices have bounced back slightly," said Bill Chen, a senior trader with Hong Kong-based Smart Timing Steel Ltd.
Key Japanese steelmakers have halted operations at some of their facilities since Monday because of power outages brought about by the quake.
Luo Bingsheng, former vice-chairman of the China Iron & Steel Association and now an advisor, said at an industry conference on Thursday that Japan's post-quake reconstruction would eventually lift global steel prices and benefit Chinese steel exports.
His speech was made available on the organiser's website (Umetal.com).
The most active rebar contract on the Shanghai Futures Exchange recovered this week to 4,817 yuan per tonne, up 2.9 percent from last Thursday.
DEMAND RECOVERY STILL SLOW
Two of China's biggest steelmakers, Baoshan Iron & Steel Co Ltd and Wuhan Iron & Steel Co Ltd said this week that they would keep their main product prices stable for April, reflecting their concern about tepid demand and high stockpiles.
Demand is expected to pick up in the second quarter as end users normally return to the market to restock, but government moves to further tighten liquidity are likely to curb the recovery.
"We believe steel prices will stay at a low level for a month or two -- a rebound is unlikely because of strong supply and lukewarm demand," said Henry Liu, a commodities analyst with Mirae Asset in Hong Kong.
CISA's Luo also said the inventories of 78 medium-sized and large steel mills surged 20 percent over the first two months of the year, and some steel mills would likely suffer losses.
Inventory building by end users was unlikely to continue, and even if steel prices rebounded they were not expected to return to their February high, Liu said.
In its monthly market report published on Thursday, CISA said stockpiles remained high going into March, and that prices would be put under further pressure as a result of still excessive output levels and increases in raw material supplies. $1=6.571 yuan) (Editing by Chris Lewis, Reuters)
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