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The cost support in the steel market continues to rise, and the domestic steel market is entering a phase of fluctuating volatility. As the Central Economic Work Conference set the tone for "steady progress" in the next year's economic development, the National Development and Reform Commission (NDRC) responded positively to the impact of large-scale infrastructure projects. This has led to a short-term upward trend in the steel market. However, with seasonal demand slowing down, trading activity remains light, and traders are not very eager to build winter reserves. Some product specifications have experienced slight corrections.
Despite this, the increasing cost support and positive market sentiment suggest that the domestic steel market is likely to enter a more volatile pattern in the near term. It is expected that prices will see a modest increase over the coming weeks.
According to the weekly price forecast model from the Lang Steel Information Research Center, domestic steel prices are expected to rise slightly this week (December 24–28, 2012). The long product market is expected to see a small increase, while the plate market may experience fluctuations. The Lang Steel Composite Index is projected to hover around 149.1, with an average steel price of approximately 3,880 yuan per ton and a volatility of about 30 yuan. The long product index is expected to fluctuate around 162.6, rising by roughly 0.7 points, while the sheet index is expected to stay around 132.7, with a similar small increase.
Market surveys from the Lang Steel Information Research Center also indicate that raw material prices are on a steady upward trend. Iron ore prices are expected to rise by 20 yuan, coke prices remain stable, scrap prices are up by 50 yuan, and billet prices are expected to climb by 30 yuan.
In the previous week (Week 51, December 17–21, 2012), the Lang Steel Composite Price Index (LGMI) reached 148.4 points, representing a 1.01% weekly increase and a 12.93% drop compared to the same period last year. The long product index was at 161.9 points, up 0.98% for the week, while the sheet index stood at 132 points, up 1.06% from the prior week.
Monitoring data from the Lang Steel Information Research Center shows that 28 out of 44 standard steel products saw price increases, while 7 remained flat and 9 declined. Iron ore prices rose between 30 and 75 yuan, coke prices increased steadily by 20 yuan, scrap prices climbed by 30 yuan, and billet prices rose by 80–90 yuan.
This week, national steel stock levels dropped again. On December 21, total steel inventory in 29 key cities fell to 11.7495 million tons, down 67,000 tons from the previous week. Inventory levels for rebar decreased slightly, while wire rod and hot-rolled coil inventories also saw declines. Cold-rolled coil and plate inventories dropped as well, with plate stocks falling by 2.74%.
The steel market showed sideways movement during Week 51. Rebar prices remained relatively stable, closing up 7 points from the previous week after a two-week rally. The main contract volume for rebar was 1.353 million lots, down 133,000 lots from the previous week. A notable trend is that positions tend to increase when prices rise but fall when prices decline, indicating weak short-term pressure on prices.
Macroeconomic factors continue to influence steel prices. Industrial electricity consumption rose by 7.0% year-on-year in November, contributing significantly to overall growth. Heavy industry electricity use increased by 6.7%, while light industry continued to grow at a faster pace. The four major industries—chemicals, building materials, ferrous metal smelting, and non-ferrous metal smelting—combined to consume 135.63 billion kWh, up 7.6% year-on-year.
Fiscal policy for 2013 includes increased investment in urbanization. The central government emphasized promoting urbanization through active fiscal policies. Meanwhile, the People’s Bank of China plans to maintain a prudent monetary policy and deepen financial reforms to ensure stable economic growth.
Industry news highlights a slight decrease in crude steel production in early December, with key steelmakers producing an average of 165.69 tons per day. Thailand initiated an anti-dumping investigation against Chinese high-carbon steel rods, raising concerns among exporters.
Downstream demand remains mixed. Fixed asset investment in the first 11 months of the year reached 13,051.11 billion yuan, showing a 0.83% increase compared to the same period last year. Shipbuilding indicators declined, with completed ship volumes down 18.2% year-on-year.
New wind power projects across 16 provinces were approved, with a combined capacity of over 8.52 million kilowatts. The National Development and Reform Commission also approved several key infrastructure projects, including power grid upgrades and western development initiatives, signaling continued investment in the energy sector.
Overall, the steel market is navigating a complex environment influenced by macroeconomic trends, policy changes, and shifting demand patterns. While short-term price movements remain volatile, long-term fundamentals suggest a gradual recovery.