Securities Journal cited Mr Qi Xiangdong deputy GM of CISA as saying that steel stocks have surged limit recently stimulated by the State Council's CNY 4 trillion bailout plan. The huge investment will help ease market panic and resume confidence. The move is slated to bring 100 million tonnes of steel demand, and the effect might be felt in the first quarter of next year given policy's hysteretic nature.

 

Mr Qi thinks the more important role for the bailout plan is to help boost up market confidence however it takes time to take effect. He said that the investment will bring large demand for construction steel, while high-end products will feel little of the effect.

 

Steel stocks have led increase in stock market for two straight days, and surged 8.73% on average recently of which 25 among the total 32 have surged limit. Wind Information shows there are 5 steel stocks that soared over 20% within 5 trading days. Wuhan Steel surged 19.03%; Angang soared 13.93% and Baosteel roared up 12.97%.

 

Mr Liu Yanqi analyst from Haitong Securities said the sharp steel stocks rally is stemming from panic slide in earlier days. And the upward room is determined by steel mills' profitability. Although it's almost certain that huge steel demand will come bolstered by the investment, spot steel market has witnessed wide-spread falls yesterday. And price for HRC has fallen to the level of that posted at the end of 2005. Therefore, it remains a difficulty to stabilize steel market.

 

Mr Xu Xiangchun Mysteel senior analyst said "The investment, covering policy related houses, rural infrastructure and highway, railway and airport etc, will bring at least 100 million tonnes of steel demand. However, this does not mean steel demand will see sharp rise next year, on the contrary, it may witness a moderate growth taking the negative effects brought by the contracting down stream housing, automobile and machinery sectors into consideration.”

 

Analysts said the new generated projects are slated to break ground in the first trimester of next year given winter weather, therefore, steel price is expected to experience a rebound following the Spring Festival next year.

 

(Sourced from MySteel.net)

 

 

Editor:    Ivy

M S N:   noble-ferroalloys@hotmail.com

E-mail:    tiandandan226@yahoo.com.cn

Write to editor: service@ferro-alloys.com