China’s steel prices dropped in the week ended January 7. SteelHome China Steel Price Index (SHCNSI) closed at 122.3 points (5,290 yuan) on January 7, down 0.29% from the previous week.

          China’s blast furnace operating rate continued to rise, while electric furnaces operating rate dropped. Daily trading volume of major steel products saw ups and downs. Steel inventories rebounded for two consecutive weeks, but still lower than the same period of last year.

          China’s steel market prices mainly increased with fluctuation in the week ended January 7. Reasons are believed as follows.

          First, market demand is expected to increase because projects in the country have been started intensively and the issuance of special bonds has been accelerated.

          Second, steel output will probably be lower than the same level of last year, although BF operating rate kept rising, steel production capacity will still be restricted due to the production limitation during the heating season.

          Third, EAF-based mills are suffering losses due to the growing scrap prices, which supports spot cost.

           Fourth, steel mills have confirmed their policy for winter stocking.

          Fifth, the current inventories are still lower than the same period of last year.

          SteelHome believes that China’s steel market price will increase this week.

---steelhome