Chinese domestic steel prices tumble for the second day

The orgy which commenced on Monday has been unrelenting on the second day as well. Unflagging decline in prices of all steel products had been on the cards for quite some time.

The uneasy silence of previous months had already prompted prudent moves by steel majors viz., Baosteel, Wugang, Angang etc in reducing July prices. This realistic albeit tactful move by the majors sent a clear message to the market about the short term trend dousing the sentiments further.

The decline of 1% in domestic prices within a short span of 2 days is acute by any yardstick and certainly raises eyebrows about the instability and volatility plaguing the market.

The construction segment deflated by the repeated onslaught and repressive measures of the government has demolished all expectations both in the private as well as government sector. The pompous 10 million budget house program has not seen light of the day in the H1. Private sector of course relapsed into silence long back.

Inflation control being the prime priority for the government after the severe drought has ridden roughshod over all other economic and business concerns. The mere fact that the reserve ratio has been revised 13 times in the last 1 year extols the importance attached by the government to rein inflation. With the CPI in June hiking by 5.5% YoY the PBOC has revised reserve ratio by another 0.5% as recently as 14 June effective from 20th June.

Eastern China area showed largest decline by nearly CNY 100 per tonne, mid China area down by CNY 30 per tonne, South West China down by CNY10 per tonne to CNY 20 per tonne last week and the trend continues unabated.

If the trend is not reversed in the coming weeks it will have a detrimental impact on the global steel market as well which is convulsing for revival as the Chinese mills will be compelled to reduce export offers thereby fanning price cuts.

Class 17-Jun 21-Jun Change %
CLPPI 7635 7557 -78 -1.0%
CFPPI 7613 7565 -48 -0.6%
CHISPI 7623 7562 -61 -0.8%

CLPPI - Chinese Long Product Price Index
CFPPI - Chinese Flat Product Price Index
CHISPI - Chinese Steel Price Index

Category 17-Jun 21-Jun Change %
PI-WRC 6315 6254 -61 -1.0%
PI-Rebar 9232 9134 -98 -1.1%

Category 17-Jun 21-Jun Change %
PI-PLTS 7010 6971 -39 -0.6%
PI-HR 8089 8017 -72 -0.9%
PI-CR 7390 7338 -52 -0.7%
PI-GP 7545 7534 -11 -0.1%

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