November heralds the beginning of price retracing as the winter sets in and 2012 draws to close. Irrespective of some glimmer in HSBC PMI index climbing to 50.4 this week in 13 months fragility of demand and global economy continues to haunt.
Weak off season demand during winter plagues the industry as the cold winds blew the northern region, a lot of construction sites chose to shut down, leading to slump in buying of long products. Even though the flat market remained stable initially the malaise has caught up.
Steel mills have resorted to production cut with 0.25% drop in daily crude steel production in 2nd week of November m-o-m. Concurrently iron ore buying has dropped with mills opting for need based buying from the stock. Stockpiles have dropped to about 90 million tonne the lowest in last 6 months.
The most traded rebar contract for May delivery on the Shanghai Futures Exchange touched a session low of CNY 3543 per tonne (USD 570), not far off last week's two-month low of CNY 3533 per tonne.
