Ministry sees steady rise in prices of production materials in H2, China

China will continue to see a steady increase in prices of production materials during the second half of the year, though prices of some items will fall from the current high levels due to oversupply, Xinhua news agency reported, citing research notes released by the Ministry of Commerce (MoC).

Prices of certain products, especially steel used for construction, will fall from high levels seen in the first half of this year due to increasing pressure of oversupply, the report said. Prices of building materials are expected to decline in the second half of the year as growth in demand slows down due to government measures aiming at cooling the overheating property market. For most building materials, both supply and demand will see certain growth for the full year of 2005, MoC said in its report.

Prices of cement will slide further due to oversupply. Output of cement will rise slightly YoY to 1bn tons or so, outstripping growth in demand. The country is expected to consume about 950Mt of cement in 2005.

Coal prices will slip from the current highs but prices of certain categories, including coking coal, premium steaming coal and meager lean coal will climb slightly, the report said. Production of coal will reach 2.08bn tons in 2005 while total demand is expected to stand at about 2.04bn tons, it said.