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

Mr Tang Xiaobo who is a steel analyst in UBS Greater China seminar stated that it is predicted that the prices of Chinese steel might rise over 8% to CNY 3920 per tone but, they may not balance the surging costs in raw materials particularly iron ore.

This, however, is as a result of the 20% export tariff that was charged by India and bad weather in Australia and Brazil.

Meanwhile, it is also likely that the growth of steel prices may increase over the original expectation while as per UBS, the steel industry might foray into re stocks period in Q1.

The steel stock may have a week growth of 9% to 15%, in the first week after Spring Festival during 2008 to 2010.

Moreover, the PMI and investment might have to go through a bounce back after Spring Festival as a result of the enough liquidity.

The prices of steel are expected to appear as an increasing trend boosted by costs, but steel enterprises could hardly run away from low profits.

China's population structure and urbanization might become the vital driving force to steel industry.

On the other hand, 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.

Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade.

Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten.

Carbon and other elements act as a hardening agent, preventing dislocations in the iron atom crystal lattice from sliding past one another.