May 2012 | Steel Tracker
Deteriorating market outlook offers no quick fix: International Long Product Market Analysis
The slower drawdown of inventory levels illustrates the demand outlook shared by many end-users and has forced mills to cut domestic rebar offers, declining by Rmb 377/tonne since the start of the year to Rmb 4083/tonne this week, a year-to-date low.
The condition of the Chinese domestic long product market seems has gone from bad to worse. Just when the bottom appeared to have been reached for domestic rebar prices, one of the major mills announces yet another price cut by Rmb 50-70/tonne in a bid to attract sidelined demand. Buyers, however, are aware of the impact their absence has on the market price and are happy to purchase minimal quantities of raw materials or semi-finished steel. Managing these lower inventory levels, end-user demand has slowed the seasonal drawdown of long product inventories at mills and has forced major producers to cut offers in an effort to stimulate demand, with smaller producers following suit. With a lack of demand, there is simply no incentive for users to purchase material beyond their needs. We view this as a sign of...
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