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20 November 2012 | Anna Reynolds
Steel purchasers should buy now as prices are at a low following failed growth expectations in the Chinese economy, analysts IHS have suggested.
Speaking on a webinar Commodities Through 2013 - Buying Opportunity or Buyer Beware last week, John Anton manager of the IHS Steel Service advised steel buyers to act as prices were low, primarily due to China’s performance, which has an impact on the rest of the world.
“Steel is big in China and the country did not grow as much as commodities analysts thought,” said Anton. “China was expecting 10.5 per cent growth but only achieved 7.6 per cent, therefore they over invested and over produced.”
The surplus of steel means lower prices and signals a good time for buyers to secure a long-term contract. Anton warned prices will go back up during the summer as fluctuations tend to occur over a one year cycle.
Meanwhile, aluminium prices will continue to be volatile and Anton recommended buying “on the dips, avoiding the peaks”. He said prices would remain choppy throughout 2013.
Anton forecasted the price of copper would go down during 2013-14, as over the past months prices have risen and fallen as more people entered the market, which in turn has opened copper mines. This has created a pressure will affect prices in the short-term. Anton said buyers should therefore buy when prices dip, but as with aluminium should refrain from stocking up.
According to IHS, GDP in the US is expected to expand by almost 2 per cent in 2013, improving into 2014. “The growth pattern is good news – the economy is getting better but not fast,” said Anton continued. “2013 will look a lot like 2012 but with a better outlook for manufacturing and consumers.”