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Construction steel price rise in China seen as short term gain

It is reported that Chinese construction steel is likely to run out of bearish trend as it edged up slightly in last week and continuing rising move in this week, adding EXW prices of steelmakers show overall rise.

However, analysts thought it might be a short term opportunity without strong demand.

According to steelmakers EXW prices by Mysteel on July 11th, July 23 main steelmakers issued their EXW prices with 16 of them increased their EXW prices by CNY 10 per tonne to CNY 80 per tonne. Till 4 PM of July 12th and other 26 steel mills also raise their EXW prices by CNY 20 per tonne to CNY 60 per tonne.

Affected by overall rising EXW prices of construction steel, spot prices of construction steel in main cities on July 12th also witnessed rise for instance average price of 20mm HRB335 rebar in 25 main cities was CNY 4942 per tonne up by CNY 12 per tonne hitting biggest increase in recent days. In addition, wire rod also showed rising move with 6.5mm wire rod up by CNY 10 per tonne to CNY 40 per tonne and its average price on July 12th was CNY 4916 per tonne up by CNY 15 per tonne DoD.

Rebar futures also experienced the upward move, showing rises in consecutive two days, bringing bullish sentiment to the market.

For the rising momentum on spot market and futures market, some analysts believed factors like loosening capital, demand release after rainy days and rising billet prices were main reasons. However these factors can hardly bolster the long term upward trend.