Chinese steel prices may surge over 8pct in 2011 - Analyst

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Mr Tang Xiaobo a steel analyst in UBS Greater China seminar said thatIt is estimated that Chinese steel prices may surge over 8% to CNY 3920 per tonne.

He said that But the rising prices may hardly offset the surging costs in raw materials, esp. iron ore price due to 20%export tariff imposed by India and bad weather in Australia and Brazil.

It is also possible that the growth of steel prices may surge over the original expectation.

According to UBS, steel industry may enter into re stocks period in Q1.

Historical data showed that in the first week after Spring Festival during 2008 to 2010, steel stock may have a week growth of 9% to 15%

Generally speaking, PMI and investment may face a rebound after Spring Festival due to sufficient liquidity. It is anticipated that in 2011 steel prices may appear a rising trend bolstered by costs, but steel enterprises could hardly run away from low profits.

For the next few years, China's population structure and urbanization may become the main driving force to steel industry. UBS estimated that the composite growth of steel industry in next 10 years may be around 3%, peak in 2015 to 0.744 billion tonnes.