Steel: High Chinese inventories could keep prices depressed
Thursday, 23 February 2012 | 11:00
With Chinese steel inventories at more than 2 year highs, a recovery in steel prices could take longer than expected, according to experts. China is one of the largest producer and consumer of steel in the world.
Inventories at CISA (China Iron and Steel Association) monitored warehouses had touched 10.98 million tonnes in late January, almost 25% up since the beginning of Jan 2012. This is also the highest level since the second half of 2009.
Such a huge inventory buildup could keep prices depressed for a longer duration since traders might opt not to make any new purchases and meet any demand from their stockpiles. Steel mills have also been reported to be selling their products at the spot market, which will put further downside pressure on steel prices.
China's daily steel output rose 1.9% in the first 10 days of Feb 2012 to 1.075 million tonnes. A recent World Steel Association (WSA) report forecasts China demand growth to moderate to 6% in 2012 with overall demand at 682 million tonnes and the lowest in 3 years.
Source: Commodity Online
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