Steel prices, demand to stay low in May
Author:Network sources Source:Network sources Date:2013-04-26

China's steel market will stay weak in May, traditionally a time of peak consumption, with downstream demand still uncertain and low prices expected to persist, the country's steel industry body warned on Thursday.

Demand for steel in China, the world's largest consumer and producer of the metal, usually peaks during the second quarter along with construction activity.

But first-quarter annual economic growth of 7.7 percent was less than forecast, and manufacturing sector growth slowed in April, tarnishing hopes for the world's second biggest economy to help kick off a global rebound this year.

"Although China has entered the peak season for steel-consuming industries, demand remains lukewarm, new building in the construction sector has fallen and the manufacturing sector remains weak," the China Iron and Steel Association said in a report Thursday.

Despite uncertain demand, China's steel mills have produced 191.75 million tons of crude steel in the first three months of 2013, up 10.1 percent from last year.

In the first quarter, new real estate construction, a major driver of steel demand in China, fell 2.7 percent year-on-year,  and while investment in railway construction soared 28 percent in the first three months, policy uncertainties lie ahead following the restructuring of China's transport ministry in March, CISA said.

Delays in the release of China's detailed new urbanization plans were also fueling uncertainty, it added.

While market pressures are expected to lead to a decline in output in May, the association said, absolute output levels remain too high and product stockpiles - which reached a record level in March - are not falling fast enough.

CISA says non-steel mill product stockpiles in major cities stood at 20.84 million tons by April 19, down 470,000 tons on the week. They have fallen for five consecutive weeks since hitting more than 22 million tons in March.

China's biggest listed steel mill, Baoshan Iron and Steel, said this month it would keep major product prices unchanged for May, but other big mills, such as Wuhan Iron and Steel, have cut some prices for May delivery, CISA said.



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