China steel prices drop most in four months
Tuesday, 26 January 2010
SHANGHAI, Jan 25 (Bloomberg): Steel prices in China, the world's biggest producer of the metal, dropped the most in four months last week as inventories piled up and concerns grew that the government may curb lending.
Inventories of steel products, including holdings by traders, producers and end users, are estimated to exceed 50 million metric tonnes, setting a record, said Ma Haitian, an analyst with Beijing Antaike Information Development Co. That's compared with an estimated 18 million tonnes a year ago, he said.
"Some may trim their inventories at discounted prices to collect money before the Chinese New Year" holiday in February, Ma said. "Speculation of interest rate hikes and other tightening measures also added to concerns about capital availability in the market."
China's growth rate in the fourth quarter accelerated at the fastest pace since 2007, as the nation's $586 billion stimulus spending and record lending stoked car and property sales. That's raised concerns the government may increase interest rates or take other measures to curb inflation and limit asset bubbles.
Baoshan Iron & Steel Co., the nation's largest steelmaker, fell 2.3 per cent to close at 7.69 yuan in Shanghai. The benchmark index slipped 1 per cent. Angang Steel Co. declined 2.3 per cent to HK$14.34 in Hong Kong, more than the 0.6 per cent drop in the Hang Seng Index.
Chinese prices of hot-rolled coil, a benchmark product, fell 2.2 per cent last week, the biggest weekly decline since September 25, according to Antaike. Prices have gained 16 per cent since October 15, the low of last year.
The decline in steel prices has led a drop in the costs of iron ore, a steelmaking ingredient.
The cash price of 62-per cent iron ore delivered to China fell 4 per cent last week to $124.30 a metric ton, based on data from The Steel Index. Prices have dropped for two weeks after reaching $131.2 a ton on January 8, a 13-month high.
Industries including housing, autos, shipbuilding and machinery will continue to grow fast, which will support steel demand this year, the China Iron and Steel Association said in a research report on January 22.
The People's Bank of China on January 13 raised the proportion of deposits that banks must set aside as reserves by 50 basis points starting January 18, increasing the likelihood of higher interest rates, according to economists.
Inventories of steel products, including holdings by traders, producers and end users, are estimated to exceed 50 million metric tonnes, setting a record, said Ma Haitian, an analyst with Beijing Antaike Information Development Co. That's compared with an estimated 18 million tonnes a year ago, he said.
"Some may trim their inventories at discounted prices to collect money before the Chinese New Year" holiday in February, Ma said. "Speculation of interest rate hikes and other tightening measures also added to concerns about capital availability in the market."
China's growth rate in the fourth quarter accelerated at the fastest pace since 2007, as the nation's $586 billion stimulus spending and record lending stoked car and property sales. That's raised concerns the government may increase interest rates or take other measures to curb inflation and limit asset bubbles.
Baoshan Iron & Steel Co., the nation's largest steelmaker, fell 2.3 per cent to close at 7.69 yuan in Shanghai. The benchmark index slipped 1 per cent. Angang Steel Co. declined 2.3 per cent to HK$14.34 in Hong Kong, more than the 0.6 per cent drop in the Hang Seng Index.
Chinese prices of hot-rolled coil, a benchmark product, fell 2.2 per cent last week, the biggest weekly decline since September 25, according to Antaike. Prices have gained 16 per cent since October 15, the low of last year.
The decline in steel prices has led a drop in the costs of iron ore, a steelmaking ingredient.
The cash price of 62-per cent iron ore delivered to China fell 4 per cent last week to $124.30 a metric ton, based on data from The Steel Index. Prices have dropped for two weeks after reaching $131.2 a ton on January 8, a 13-month high.
Industries including housing, autos, shipbuilding and machinery will continue to grow fast, which will support steel demand this year, the China Iron and Steel Association said in a research report on January 22.
The People's Bank of China on January 13 raised the proportion of deposits that banks must set aside as reserves by 50 basis points starting January 18, increasing the likelihood of higher interest rates, according to economists.