It is reported that Chinese construction steel prices continue to increase as traders are buying more materials for stocking and more mills hiked their ex-work prices.

But we see the underlying demand with no fundamental change due to high temperature and cooling construction activity. Mysteel understands the mills huge capacity will continue to limit the prices increase. The government’s CNY 4 trillion package is mainly invested in the infrastructure construction projects, but at the same time, the policy stimulates the small and medium mills to escalate their longs productions.

By the end of Thursday, the average price of 20mm rebar and wire rod in major Chinese cities posted at CNY 3820 per tonne and CNY 3820 per tonne up CNY 116 per tonne and CNY 144 per tonne respectively from the previous week. Insiders believe the prices will see much pressure in the coming week with fluctuations. Experts said the coming high temperature and rain will largely cool off many construction projects. This week, there are 66 mills adjusted the ex work price for rebar and 50 mills adjusted the ex-work price for wire rod.

In Shanghai, The price of HRB 335 20mm rebar goes at 3670 per tonne; HRB 400 20mm grade material is posted at CNY 3700 up CNY 110 per tonne and CNY 40 per tonne respectively from that of last Friday. Price for commercial wire rod goes at RMB3720/ton, up CNY 70 per tonne and that of Hi-speed material up CNY 80 per tonne to CNY 3770 per tonne.

Take Shanghai price for HRB 335 20mm rebar as benchmark, the price continues to increase robust. Traders are confident about the future market at the moment and believe the market will continue to see increase in the coming week.

The European Union is to impose a 24% of anti-dumping duty on Chinese wire rod import. The measure is applicable for five years as from the beginning of August 1st 2009. This action surely will further depress the already tough Chinese export. At the same time, the move hasn’t been well received by European wire rod buyers, saying that they need to pay more for the materials.

Rumors are also heard amid the market that Chinese government is likely to scrap the 15% of duty on rebar export from July 1st in a bid to support the flagging exports. It will be good news if it comes true said both traders and market analysts.