Sources from the State Development and Reform Commission unveiled that prices domestic steel products, especially those used in construction, fell back remarkably since mid-March. Take wire rods and reinforced bars. Prices of these products are standing at about 3250 yuan per ton and 3440 yuan per ton respectively, more than 750 yuan lower than that in early March. The reasons are believed to include the state government��s efforts on macro-control by tightening money supply and reigning in blind investment and low-level expansion in some overheating sectors, as well as the stronger US dollar and decline of main raw materials prices both in domestic and international markets. The downward movement of steel prices will continue in an even more faster speed.

Since last year, prices of steel products kept soaring. By early March this year, prices for main steel products varieties surged as much as more than 1000 yuan per ton. Such a staggering rise not only effected some impact on the downstream industries, and more important, but also further fueled up the investment spree in the steel and iron industry. For the first two months of this year, 16.9 billion yuan was pumped into the industry, 202 percent up over the same period of last year. Such a sharp expansion of production capacity led to tight supply and rocketing prices of materials. Prices for iron ores, waste steel, and cokes were pushed up by 200 percent ,50 percent and 40 percent respectively, which in turn boosted costs and prices of steel products.

The state government has taken a series of measures in a timely and decisive way to improve the macro-control to solve the problems in the national economic operation. The efforts have been stepped up this year. Policies to tighten credit and further cool down some overheating sectors have been staged. Their effects began to be felt in the steel market. Demand from downstream sectors also slowed down due to the awfully high prices of steel products. Most users reduced their purchasing frequency or ordered on demand.

But the production did not respond timely to the demand contraction. The first quarter of this year still saw a robust production rise of 29.47 compared with the same period of last year. Inventories of steel products especially those for construction use generally increased in the domestic market, showing a picture of supply exceeding demand in this period.

In the international market, US dollars were getting stronger. The exchange rate of euro against USD has been back to 1:1.18. This pressed prices of USD based national commodities, including basic raw materials such as iron ores and waste steel all down. Materials for steel production are getting cheaper than they were both in the world and domestic market. All of these contributed to the fall-back of steel products prices.

The result of monitoring on steel products transaction markets in 22 major cities in China showed that since mid-March this year prices of main steel products varieties have been down for 6 weeks successively. Steel products for construction use, such as wire rods and reinforced bars, were 17 percent cheaper than they had been. Their prices now are similar to those in last December. Especially since April 26, prices of steel products have been down even faster than ever.

What��s more, prices of panels are also going down generally. Especially prices of panels with medium thickness stopped climbing and began to descend.

However, despite of the remarkable fall-back in the home market, prices of steel products are still standing high. Main varieties are 30 percent more expensive than they were in the same period of last year.

It is expected that with state policies of macro-control in place and prices of related materials for steel production back to normal, prices of steel products will continue to go downward.

By People��s Daily Online