Average steel prices in China rose in February 2005 by 1.6
percent over the previous month, 1.1 percent over the same period
last year, and 3.8 percent over the end of 2004. This was according
to Beijing-based China Business Times Tuesday,
quoting sources at the China Logistic Information Center
(CLIC).
Compared to January, prices in February for bar sections, wire
rods, medium plates and thin plates rose by 0.8 percent, 1.8
percent, 1.6 percent, 2.6 percent respectively.
In the first two months of this year, average prices for
domestic steel products rose 4.5 percent over the same period last
year, and were 3 percent higher than at the beginning of 2005.
The price hikes are likely to be a result of rising production
costs. In addition, increased demands coupled with stock shortages
have also pushed prices up.
Huge price fluctuations in 2004 caused manufacturers to keep
inventories low as a safety precaution. As a result, stocks in the
first two months of this year were lower as compared to the same
period last year.
The CLIC estimates that prices will remain high for the first
half of this year citing reasons including a growing domestic
demand for steel products, rising production costs, a recovering
world economy with a corresponding increased international demand
for steel, and a devaluation of the US dollar.
In addition, the Chinese government is reportedly considering
restricting steel production by shutting down hundreds of smaller
factories with annual production capacities of below 800,000
tons.
Insiders also worry about the export and import markets, which
have the biggest influence on the industry. Continuous price hikes
in the country have narrowed the gap between domestic and
international steel prices, and it is feared that exports, in
particular, will weaken, slowing growth still further.
There are also signs that the government might cancel tax
rebates on steel billets in the short term in a bid to adjust
prices, and to alleviate the pressures of continuing industrial,
energy and transportation development.
(China.org.cn by Tang Fuchun, March 24, 2005)