After hovering over CNY 4200 per tonnes for some time, domestic construction steel and hot rolled coil/plate prices firmed up tenderly when entering into mid-March.

This week, construction steel mainstream transaction prices soared up sharply and the market in Beijing , Tianjin and North China performed actively. In East China , northwest and northeast, main transaction prices ascended as well, with effective demands gradually mounting up.

Raw materials market of iron ore concentrates, scrap and pig iron has witnessed stabilization while that of coke and ferroalloy run with weakness, all of which propped up steel market.

However, the current market still has instinct to run upward and the transaction prices are expected to see a small wave of increase.

I Price of Main Products Saw Evident Increase

Rebar in Beijing market this week hit CNY 4200 per tonne with robust evidence. On March 14, 2012, II grade rebar was dealt at CNY 4350 per tonne in Beijing market and wire rod prices hit CNY 4250 per tonne, up CNY 150 per tonne from that in early March. In the wake of this boost, rebar prices in Shijiazhuang even attained CNY 4450 per tonne. Besides, that in Hohhot , Baotou and Shenyang advanced as well.

In Shanghai market, hot rolled coil/plate prices continued increasing to CNY 4300 per tonne, up CNY 50 per tonne week on week.

This rise in price, according to market players, is inevitable because of the long-term lukewarm of the market. On the other hand, under huge costs pressure, mills will catch at any chance to raise prices. Following up the mild price hike in mid-March, mills tread on the heels of increasing their ex-works prices successively.

Hebei Iron&Steel Group up revised ex-works prices of construction steel by CNY 100 per tonne played a leading role in this price rising tides and Shagang's imitation pushed forward this flow.

As of raw materials market, iron ore concentrates prices upturned to CNY 1200 per tonne and pig iron is striding forward CNY 3000 per tonne. Common carbon billet transaction prices ascended to CNY 3780 per tonne.

II Market Skyrocket Is Unlikely to Sustain

In consideration of this price increase in March, it is still localized. Firstly, the price of CNY 4350 per tonne in Beijing market is close to that in Guangzhou , much higher than that in Shanghai and Shenyang . It will be the peak price if it continues to soar up.

Secondly, current social inventory of construction steel still maintains high, causing certain pressures to the price increase.

The social inventory in Beijing market hits 900,000 tonnes, that in Shanghai is 600,000 tonnes, Shenyang is 1.1 million tonnes and that in Guangzhou perches at 120,000 tonnes.

Thirdly, domestic crude steel output now keeps relatively low level, but once steel prices ascend, crude steel output will follow up to mount up. Consequently, "high price, high output, high inventory and high costs" of domestic steel market will happen again, which will undoubtedly bring negative influence on domestic steel market's long-term development.