October may set off a new round of price surge in China

The new round of price surge is led by Hebei steel group, which announced a price rise of CNY 200 per tonne for its construction steel EXW price on September 10. And again on September 11, Shagang steel has also announced a rise of CNY 200 to CNY 300 per tonne for the same species of steel. BaoSteel hiked HR prices by CNY 300 per tonne on September 14

No wonder it is predicted by China’s steel industry that mainstream steel enterprises will all raise their factory price in October, due to the energy conservation and emission reduction policy by the central government.

As to market condition of last week, it can be plainly described by one term: rise followed by decline. Influenced by the above policy, the steel spot market witnessed sharp wise in the first half of the week. However, transaction was not strong enough to support a continuous rise, so the price fell back a little at the end of the week.

Shown by statistics, steel production and supply have both been declining due to various reasons, which are quite good news for October steel market, because October is the traditional busy season and steel demand will getting stronger and stronger. Thus the pervious oversupply problem will be adjusted to some extent, and the supply and demand balance will be restored again.

Meanwhile, the support from rising material price is also encouraging. Take iron ore price for example, the rise of the price has certainly contributed to the current price surge of steel price.

Therefore, it is widely believed that October will reproduce the price surge in September, only with different rising levels.