Chinese steel futures fell in price again

After a slight increase in cost, Chinese steel futures began to fall in price again. The reason for this was a decrease in demand for steel characteristic of the winter season. This trend is especially manifested in the northern regions of the PRC.

In Northern China, the demand for the products of the steel industry begins to decline from November to December, when the rate of construction slows down due to the onset of cold weather. Further, the reduction in demand continues throughout the winter.

According to the website of the Chinese Association of iron and steel (CISA), the drop in demand for steel is also associated with winter holidays. According to the Association, during the Christmas and New Year, merchants are in no hurry to replenish their stocks of products, so a moderate reduction in demand for metrics will continue until January 2014.

In addition to the seasonal reduction in demand for the products of the steel industry, the cost of steel futures was also negatively affected by the tough credit policy of Chinese banks and a decrease in steel smelting. So, for one trading session on the Shanghai futures exchange, the cost of a May contract for reinforcement fell from 3.614 to 3.608 yuan ($ 590).

Due to the fall in demand for steel, the rate of increase in the cost of futures for iron ore also began to slow down. In particular, last Tuesday on the Dalyan raw material exchange, the cost of futures for iron ore increased by only 0.1 percent.

In addition to this, the cost of restored iron slowed down on the Dalyan raw material exchange. So, in comparison with October 31, 2013 last Tuesday, the cost of restored iron 62% of the degree of metallization increased by only 10 cents, reaching $ 132 per ton.