Chinese domestic steel prices will likely stay rangebound in the near term with supply and demand almost balanced, according to the latest monthly report released by the China Iron & Steel Association (CISA) on December 18.
“The slowdown in steel demand will be more pronounced in the coming term, and steel output is unlikely to show a significant increase given the production curbs imposed during the winter cutback season,” CISA pointed out.
With temperatures dropping further, demand for construction steel from the real estate and infrastructure sectors is expected to stagnate in northern China. Besides, steel processing enterprises are likely to reduce or halt production because of the Chinese New Year holidays occurring in late January, earlier than usual, which will reduce the end-users’ demand for flat steel, according to CISA.
Last month, China’s steel prices saw a significant recovery with steady demand from downstream users. Among the eight core steel products including longs and flats, prices for rebar and wire rod saw the sharpest month-on-month increases, rising by 8.7% and 6% respectively to reach Yuan 4,051/tonne ($578/t) and Yuan 4,229/t as at the end of November, CISA’s data showed.
However, China’s crude steel production reversed up last month, with daily output reaching 2.68 million tonnes/day, growing by 1.7% month on month, CISA noted, quoting data from the country’s National Bureau of Statistics.
“Considering the slowdown in demand in the off-season, domestic steel producers are recommended to actively adjust the industrial structure and be reasonable in arranging their production and sales to maintain the smooth running of the domestic steel market,” CISA said.
Chinese steelmakers are expected to face more challenges in the coming term as their profit margins may be affected by the rising raw materials costs and weakening steel prices, CISA warned.
As of December 13, the price of Fe 62% imported iron ore fines was assessed at $91.63/dmt CFR China, up 6.3% on the month, while the association’s Composite Steel Price Index decreased by 0.3% from the prior month, CISA’s data showed.
The export market provides little room for optimism too, with the shirking of demand in the global steel market, CISA observed. The World Steel Association has predicted that the yearly growth in global steel consumption will reach 1% in 2020. “Although the trade friction between the United States and China has temporarily reached a consensus, the global market remains complex and challenging in the long term, with the slowing global economy and increasing regional trade protectionism,” CISA noted.
For November, China exported 4.6 MnT of steel, down 4.2% month on month, while for the first eleven months of this year, the total export volume declined by 6.5% on year to 59.7 MnT, the association said quoting data from China’s General Administration of Customs.
~ This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Leave a Reply