Slump In China Demand Likely To Affect Steel Prices In Fourth Quarter

Posted: Monday, May 03, 2004 at 0000 hrs IST
Updated: Monday, May 03, 2004 at 0000 hrs IST

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: It could have been enormously risky to forecast global steel prices a month and a half ago. About the possible third quarter prices, opinion was somewhat divided among those who dared to do so. There were some who thought the prices could crash even by the turn of the first quarter along the trends already observed. Others predicted a huge chance of that happening by the middle of the quarter. They were more or less confident of a major fall by the beginning of the third quarter.

Given the nature of speculation in the market and the nature of trading, what was expected once upon a time to happen on a seasonal basis towards the end of the second quarter (or the beginning of the third) happens now a days by the middle of that. Therefore, the seasonal factors in the market, the emerging demand and supply balance and speculation put together will make the steel market an interesting place to watch very soon. Will the prices crash? This is the moot question.

Let me start with the following observations.
The steel orders from China have fallen.

What is of larger worry for the steel market around the world is that if steel consumption growth rate falls sharply, say to about 10 per cent from the last year’s level of about 25 per cent, and steel production is maintained at about 20 per cent, the country will have about 1.8 million tonne of excess finished steel

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