Chinese Steel Sector Quarterly Performance

Chinese steel sector  is abuzz with weak demand sentiments since last 1-year. The country’s government promoted massive investments in steel mills without considering demand scenario. Thus, more than subdued demand, the major area of concern for Chinese steel mills is excess overcapacity, which is hurting their business prospects.

The overcapacity problem has not only gripped China but other steel producing countries also across the globe.

Source: World Steel Association

The ideal capacity utilization for steel sector is 80%. However from the above graph, it can be inferred that the capacity utilization is 68% for the month of Aug’15, which has also pressurized steel prices.

China’s steel industry performance since Jan’15-Aug’15

Crude steel production: China’s crude steel output fell by 2.34% to 66.94 MnT in Aug’15 against 68.58 MnT in Jan’15.

Export: China’s finish steel exports (include flat steel, bars, rods steel pipes, and other products) increased by 5.74% to 10.30 MnT in Aug’15 compared to 9.74 MnT in Jan’15.

Import: Chinese finish steel imports decreased by 12.06%  1.02 MnT in Aug’15 in contrast to 1.16 MnT in Jan’15.

China’s product-wise Q-o-Q price comparison

We at SteelMint have made price comparison of products in two quarters i.e Apr’15-Jun’15 and Jul’15-Sept’15.

Domestic and export prices of raw material and finish flat products fell during Jul’15-Sep’15 quarter. Amongst all the products, major price correction was registered in both domestic and export HRC offers. In domestic offers, prices declined by 18.20% and export offers by 16.70%.

Source: SteelMint Research