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Spring market is expected to be slightly higher before the holiday
The domestic steel market is expected to see a slight increase in prices this week, driven by rising iron ore costs and strong expectations for spring demand. Steel mills have been raising their ex-factory prices, while traders are also increasing winter stockpiles in anticipation of better market conditions. This combination of factors has led to a steady upward trend in the short term.
According to the latest data from the Lange Steel Information Research Center, the composite steel price index is expected to fluctuate around 153 points this week, with an average steel price of about 3,980 yuan per ton. The long product index is projected to rise slightly to around 166.9, while the steel sheet price index is expected to increase marginally to approximately 136.3 points. Overall, the market is showing signs of recovery, with modest price increases across most segments.
In terms of raw materials, iron ore and coke prices remain stable, but scrap prices are expected to drop by 50–60 yuan per ton, while billet prices may rise by 30–60 yuan. These fluctuations reflect the ongoing volatility in the supply chain.
Steel inventories have also shown some changes. In the fourth week of 2013, the total social inventory of steel in 29 key cities reached 13.3 million tons, up 2.17% from the previous week. While building materials and sheet stocks have slowed in their growth, the overall trend remains positive.
Looking at the futures market, the main rebar contract (1305) saw a 0.99% increase on January 25th, closing at 4,076. The trading volume and open interest both rose significantly, indicating increased market activity.
On the macroeconomic front, the State Council released its "Twelfth Five-Year Plan for Marine Economic Development," aiming to boost marine science and technology innovation and expand marine protected areas. Additionally, the "Twelfth Five-Year Plan for Energy Development" outlined goals for energy efficiency and production capacity, emphasizing sustainable growth.
The Ministry of Industry and Information Technology also issued guidance on accelerating mergers and acquisitions in key industries, aiming to enhance industrial concentration and create globally competitive enterprises.
Meanwhile, the HSBC China Manufacturing PMI hit a 24-month high of 51.9 in January, signaling continued growth in manufacturing activity. This reflects stronger domestic demand and improved business confidence.
Raw material supplies also showed improvement, with significant additions to coal, iron ore, and other mineral reserves in 2012. BHP Billiton reported a 7.6% increase in annual iron ore production, further supporting global supply.
However, challenges remain. The U.S. imposed anti-dumping and anti-subsidy tariffs on Chinese wind towers, which could impact export sectors. Meanwhile, the global shipbuilding industry continues to face weak demand, with new orders dropping by 45% year-on-year.
Despite these challenges, the steel sector remains optimistic. The China Iron and Steel Association predicts a 3.2% increase in global steel demand for 2013, with China’s demand expected to grow by 3.1%. With falling inventories and rising raw material prices, the outlook for steel prices remains cautiously positive.