Jaway Stainless Steel

Chinese steel market outlook

Dragon land promises to be pot boiler in Q3 with x factor always up its sleeve. This power house which can single headedly tilt the fortunes in global steel industry is due for some activity.

The tug of war between the PBOC and the market has crippled the levels in the best of times leaving everybody aghast. With spring and summer season past with abysmal construction activity and transaction it is a veritable ground for turn of fortunes lest the state throws its hat in the ring with another hike in interest rates.

In any case with stock levels running low with the stockiest and end users in all key segments buying is expected to pick up as the major housing projects are slated for completion before the year ends. Prominently 10 million budget housing construction plan. At the same time the urbanization plans afoot in remote areas of China as a part of their 12th five year plan promises to give steady demand in the coming days.

It is expected the present hand to mouth approach would be jettisoned in favor of stocking as the market flares up.

At the same time mills on roller coaster production spree bettering its MoM record against all odds reflects the cost compulsions of the mills to carry on production with iron ore and coke price refusing to budge to humble levels.

Surprisingly it has been noticed that despite runaway production and sullen levels in domestic market the stock levels of steel has also been maintained under manageable levels clearly indicative of consumption going on under disguise.

The futures market recently showed a firm appreciation of nearly 5.5% for October for rebars indicative of optimism.

The Chinese export levels which have been playing havoc recently in all quarters might see a rally in Q3 backed by sound domestic fundamentals and a resilient European and MENA market along with normalization in Japan after the Tsunami generating demand.

Indian shores will largely remain out of bounds for the importers.