China’s leading steel producer, Baosteel Group, has rolled over its carbon flat steel prices for Sept’21 deliveries effective from today, as per reports. This is the third consecutive month when the mill has announced a roll-over of prices.
Last month, the manufacturer rolled over prices in a bid to let the market absorb the previous hikes.
SteelMint analyses possible factors behind the rollover in prices
1. Production-related restrictions: Chinese authorities have been taking continuous measures to curb steel output in order to reduce carbon emission and restrict exports from the country. The steel hub of Tangshan in Hebei province continues to be at the centre of the output cuts since the measures were announced in Mar’20.
2. Restricting exports and increasing domestic buying: With the export rebate withdrawal on HRCs and CRCs, the country is planning to restrict exports and increase domestic buying. With this move, the company has kept its prices largely stable to escalate buying in the domestic market.
Outlook
Various factors may get into play in the upcoming months to keep the market momentum going with a major focus on domestic market activities:
i) More stringent production curb norms towards achieving carbon neutrality, and restricting exports.
ii) With a focus on the Winter Olympics, to be held in Hebei in Feb’22, more announcements on logistical and production restrictions can be expected in the upcoming months.
iii) To restrict the crude steel output this year to 2020 levels, the government might announce production curbs in Jiangsu and Anhui provinces too.
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