Steel supply and demand throughout China are expected to keep stable in the coming term, according to the latest monthly report of the China Iron & Steel Association (CISA). Demand from end-users should recover further with the successes local authorities are having in their battle against the COVID virus and the implementation of central government measures to stabilize economic growth, it said.
The global economy in facing great downward pressure this year, the association noted. The World Bank’s latest forecast released on June 7 showed that global economic growth for 2022 is expected to fall to 2.9%, far below the level of 4.1% forecast in January.
In response to stiff economic headwinds brought on by the grim situation abroad and the impact of the COVID resurgence at home, China’s State Council unveiled a revival package of 33 measures last month whose benefits should emerge gradually over the near term and should accelerate the recovery of steel demand, CISA noted.
Demand from end-users in some regions of China has already started to kick in with the improvement in transport services, thanks to the easing of COVID-related restrictions, CISA pointed out. This may help to further reduce finished steel inventories at mills’ yards, it said.
As of June 10, total stocks of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by CISA’s member mills had declined slightly to 18.54 million tonnes, down 1.1% from the end of May.
However, steel inventories at traders’ warehouses had increased somewhat in early June, with the total volume of the five key steel items in the 21 Chinese cities under CISA’s survey reaching 12.38 million tonnes as of June 10, up 2.6% from ten days earlier.
As for the supply side, China’s crude steel output increased steadily during the first five months of this year. The total volume was reported at 435 million tonnes over January-May, still lower by 8.7% compared with the same period last year, CISA quoted data from country’s National Bureau of Statistics as showing.
For the coming term, Chinese steel mills should analyse the demand situation and arrange their production reasonably, to guarantee steel supply and keep domestic steel prices stable, the association suggested.
Besides, though prices of major steelmaking raw materials had decreased somewhat last month, domestic mills still face great cost pressures, CISA warned.
For example, by the end of May, Chinese prices of imported iron ore were 15.1% higher on average compared with at the beginning of this year, while Chinese steel prices rose by only 1.1% during the same period, according to the report.
Written by Nancy Zheng, zhengmm@mysteel.com
Note: This article has been published in accordance with an article exchange agreement between Mysteel Global and SteelMint.
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