Trade Resources Industry Trends Demands for Steel Will Maintain Lower Than Supply and The Marginal Cost

Demands for Steel Will Maintain Lower Than Supply and The Marginal Cost

Beyond the short time,demands for steel will maintain lower than supply and the marginal cost for raw materials are heading for decline,and thus the cross year increase for steel prices will perform reasonably.

Investments in Real Estate and Railway Infrastructure Firms up

National Bureau of Statistics reported national investments on real estate development in January to November 2012 increased by 17.6%nominally to CNY 6.4772 trillion over prior year,with growth increasing by 1.3 percentage points from that in January to October 2012.

Meanwhile,the total floor space of commercial housing was sold 917.05 million square meters in January to November 2012,increasing by 2.4%over last year,while that in January to October dropped by 1.1%

Besides,the investments on China's railway infrastructure construction realized CNY 64.3 billion,CNY 69.8 billion and CNY 70.1 billion in September-November,2012 separately,totaling CNY 204.2 billion in the last three months,while approaching the total investments of the first eight months of this year.

Iron Ore Prices Behave Strongly

Although downstream users'demands for steel turn weak and steel mills conduct overhaul successively in the traditional off season,iron ore inventory at ports finally decline after the previous consumption.

However,iron ore prices in the long term are still expected to drop because China is considering reducing taxes and dues of 10%on domestic mines,which will lower iron ore production costs to USD 90 per tonne from previous USD 100 per tonne.

Steel Products Inventory Hovers at Low Level

Current social inventory of 11.88 million tonnes steel products and 5.03 million tonnes rebar are still relatively low in spite of the continuously two week's increase of rebar inventory,which will pave the way for the new supplement in the first quarter 2013.

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Domestic Steel Prices in China May Firm up in New Year
Topics: Construction