Steel prices fall on China real estate policy

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 May 2010

As the Chinese government released its macroeconomic policies to rein in property prices, steel prices began to decline in May. A bumper steel production & hike in Repot rate in China has forced the prices to come down. China imported 55.3 million tons of iron ore in April, down 2.9 percent from a year ago. New deals for June production are facing resistance to find buyers. According to a report released by CISA, due to continued growth in production, high inventories and low export volume for steel, supply is likely to continue to exceed demand.
Crude steel output in China rose by 27 % to 55.4 million tons in April from a year ago. Steel prices are taking the U - turn globally; have forced the traders, buyers to bring down their inventories at significantly lower levels.
Lower buying interests from Turkish buyers and ample supply of Billets and Scrap at lower prices have forced the Ingot & Billet prices to sink down. News is been cited that, new orders for ferrous scrap from EU & US zone is been made at the lower prices, and scrap prices have started cooling of from their highs.
Billets prices have also seen a significant correction in prices in the International markets on back of low demand & buyers missing out from the market. At NCDEX, the Steel prices have been consolidating in a narrow range since last one month after it slipped from the highs of Rs26240/Mt in the beginning of the month.
The counter is expected to track the major support of Rs23450/Mt in near term, the pivot level from where the sharp rally took off in the month of Feb'10. Incase the metal is able to stay above the same, we might expect a rebound from lower levels, otherwise, sharp correction is on the cards.
The overall trend for the metal seems to be bearish only, with metal trading below its crucial 50 and 200 day EMA and rebound from the aforesaid support can be utilized as an opportunity by bears to take charge of the counter all over again.

Source: Religare Commodities