Drop in Chinese Steel Prices A Cause Of Worry For Nickel Markets Back to News

China's domestic steel price has fallen for ten weeks in a row, with the average loss posted at some 400 yuan per tonne and the deepest drop for certain products exceeding 1000 yuan per tonne, according to Wang Dayong secretary general of Hebei Association of Metallurgical Industry. At the current price level, majority steelmakers there have dropped into loss making.

This is negative for the commodities like Nickel that are already under stress due to fall in the value of EURO to 4 years low in early June. Tensions from Europe are still substantial and the rise of worries from China can linger the progress of Nickel in coming days.

The Chinese steel prices were on the rise in the first quarter and started to fall downward from mid-April. So far, the average price for major steel varieties came to 4597 yuan per tonne and the construction steel price has fallen to 4172 yuan per tonne on average down over 400 yuan per tonne respectively. While the price comes down, the production cost contrarily keeps going up mainly for iron fine coke etc.

Drop in steel prices are closely related to the construction industry which is a major driving force of steel demand growth; but the nation curbs on the property market narrowed down consumption for steel products and subsequently sent the price into downward path.

Meanwhile, Domestic Nickel prices are trading sideways after a positive outing last night. MCX Nickel is at Rs 901 per kg, up Rs 6.5 as we write. The prices can see some more upside towards Rs 915-920 from where fresh shorts can be initialized.