Steel inventory in China has gone up a whopping 193.3% over January to mid-March, 2020 compared to December, 2019, as per data from the National Development and Reform Commission (NDRC) of China, a copy of which is available with SteelMint.
The data also reveals that China’s steel exports, steel prices and profits of steel enterprises also fell in the first two months of calendar 2020 compared to the same two months of 2019.
However, crude steel production continued to increase year-on-year (Y-o-Y) in January-February, 2020 over the same two months in 2019.
Inventory
Steel stocks increased rapidly. The cumulative stocks of five major steel products (rebars, wire rods, hot rolled coils, cold rolled coils and medium plates) in major cities in China amounted to 8.12 million tonnes (MnT) at the end of January and 19.05 MnT at the end of February. By the middle of March, the same amounted to 20 MnT, an increase of 13.18 MnT or 193.3% over the end of December last year.
A source in China told SteelMint that steel stocks have risen because of subdued demand on account of the Novel Coronavirus outbreak in that country.
Crude steel output
China’s crude steel production continued to increase Y-o-Y. According to the data of the National Bureau of Statistics, from January to February, 2020, the output of pig iron was 132.34 MnT, up 3.1% Y-o-Y over the same two months in 2019. The output of crude steel was 154.7 MnT, up 3.1% Y-o-Y. But output of steel was 167.13 MnT, down 3.4% Y-o-Y.
Exports
Steel exports fell sharply Y-o-Y. According to the data of the General Administration of Customs, 7.811 MnT of steel were exported during January and February, 2020, a Y-o-Y decrease of 27.0%. A volume of 2.041 MnT of steel were imported, a Y-o-Y increase of 2.1%.
Prices
Steel prices continue to fall. According to data from the China Iron and Steel Association (CISA), at the end of January, the comprehensive price index of China’s steel products was 105.48 points, a M-o-M decrease of 0.58%. At the end of February, the index continued to decline to 100.39 points, a M-o-M decrease of 4.83%.
Profits
The profits of steel enterprise decreased Y-o-Y over the two months under review. During January and February, members of CISA covered under the survey realised sales revenue of RMB 526.5 billion, down 6.04% Y-o-Y. Profits realised were RMB 12.5 billion, down 35.8% Y-o-Y. Sales profit margins were at 2.35%, down 1.09% Y-o-Y.
The source said that demand being lower, prices of raw materials like coke and scrap are likely to offset the narrowed margins.
The prices of imported ore rose due to fluctuations in supply. According to data with the General Administration of Customs, during January and February, 2020, the import volume of iron ore in China was 176.84 MnT, up 1.5% Y-o-Y. The price of imported ore fell to USD 79.53/tonne at the end of January and rose to USD 83.39/tonne at the end of February.
~By Madhumita Mookerji
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