(Yicai Global) Aug. 11 -- The current sharp rise in steel futures prices is driven by alarmist speculation, not market demand or reduced supply, China Iron and Steel Industry Association said on social media.
The price of China's steel futures has soared recently, with the rebar index rising from CNY3,412 (USD509) on July 24 to CNY4,053 on Aug. 7.
The association invited representatives from future exchanges and companies, steel firms, commodities e-commerce platforms and information consultancies to analyze the cause of "abnormal changes" in black futures markets and stock prices of listed companies, it said.
The assembly agreed that the current hike in steel futures prices were caused by misinterpretations about the decapacity of some institutions, the removal of substandard steel products, environmental supervision and the air pollution control program in '2+26' cities. Widespread judgment that steel prices will soar as supply decreases in the second half was deemed a key factor. These judgments exaggerate the impact of environmental policies on market supply and are one-sided, alarmist speculations that could benefit certain companies, the representatives believe.
A similar incident happened earlier in the year, when a total ban on substandard steel products saw a wave of market speculation push up steel spot price, steel futures and imported iron ore prices. The industry association reacted promptly and stabilized the market.
The stable supply and demand in the first half of the year shows that the ban on substandard steel did not result in a sharp rise in steel prices of cut supply. In contract, companies released their produce at a reasonable rate to meet domestic demand and maintain a stable market.