Zhao Chenxin, spokesman at China’s National Development and Reform Commission (NDRC), has stated that the significant rising trend of Chinese domestic finished steel prices has been driven by government policies and market speculation. While the root cause of overcapacity has not changed yet, it is thought that the rising trend of finished steel prices in China is unlikely to last long, Mr. Zhao said.
The NDRC official stated that the increases in domestic commercial residential building sales and steel traders’ replenishments of their inventories have stimulated demand in the domestic finished steel market. In 2015, production halts at some steel enterprises and production restrictions in some areas of China due to important events held in the country contributed to reduced production and supply. In addition, speculative purchases have been observed in the domestic finished steel market, which have boosted finished steel prices. As of April 30 this year, the composite steel price index (CSPI) in China stood at 84.66 points, up 11.47 percent year on year. However, Zhao Chenxin stated that, with the problem of overcapacity in the domestic finished steel market remaining unresolved, the rising trend of finished steel prices in China is unlikely to last long.