Steel prices - Anyone feeling bullish yet?
First, the charts:
Next, the news flow:
. . . steel prices in the UAE have plunged 35% to 40% after surging by at least 90% in the H1 of this year on surplus stocks and panic selling by traders.
“There had been heavy speculative imports of steel by even those who were not in the business. As a result of such hectic imports, availability of steel rebars increased substantially. With the demand slowing down due to a slackening of construction activities, these stockiest, especially the new players, got panicky and started to sell at lower prices. On top of that, Turkish steel manufacturers also slashed prices overnight and shipped huge quantities to the region, further aggravating the oversupply situation.”
. . . the fall in prices has come during the last 1 month due to reduction in the steel price and ship price and the depreciation of the rupee against the dollar. It is estimated that the yards in Alang have cumulatively lost more than INR 200 crore.
Alang had demolished 11 ships in June, July saw the breaking of 20 ships and August 21 ships which yielded 1,05,917 tonnes.
The market’s verdict?
Finally, what about China (the biggest hope for metal bulls)? Well, it has major supply & demand issues:
Real Estate Market Braces for Cold Winter
In January, the real estate company Hengda won a nearly 100-round bidding war for a valuable plot in the village called Juanmachang, agreeing to pay 4.1 billion yuan. The developer planned to build 310,000 square meters of apartments, and charge an average 13,000 yuan per square meter, making it the priciest real estate in Tianhe. But suddenly, the local property market froze in its tracks. Hengda’s plan hit a brick wall. And now, the slums will stay.
Data for 10 cities including Shanghai, Beijing, Guangzhou, Shenzheng, Tianjing, Chengdu, Xiamen, Shenyang, Wuhan and Changsha said sales volume fell an average 41 percent in the past year. Sales in Shanghai, Shenzhen, Wuhan and Xiamen alone fell more than 50 percent. Central bank data also showed that loans to real estate enterprises fell 30 percent to 399 billion yuan in the first half of this year.
China’s steel exports hit record in August
China exported a record 7.68 million tons of rolled steel in August, an increase of 6.5 percent on July, or 42.78 percent on the same month of last year.
. . . the zero tax rebate measure was intolerable for some steelmakers, who had incurred more losses in the steel price slump on the domestic market over the past two months.
Bottom line: Steel prices in India will fall. A lot. Soon.
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