At International Conference on China’s Steel and Financial Derivatives which was held on June 21-22, and the third session of its kind, industry experts looked ahead to the market in the second half of the year and believe that steel products may face oversupply and prices will fluctuate slightly. Below are the key takeaways:-
China’s steel demand likely to remain stable – Qu Xiuli, Vice President of the China Iron and Steel Association, believes that China’s steel demand is expected to remain stable, and that the current social inventory and corporate inventory of steel are at relatively low levels. However, at the same time, the production capacity is increasing and the market supply has moved up. On the whole, the steel market may face oversupply in the second half of the year, but due to cost support, steel prices are expected to fluctuate slightly.
China’s increasing demand for high grade ore- In respect of iron ore, in the first five months of this year, the price of iron ore fell back to a high level after a sharp decline. Li Xiangyang, general manager of Shagang (Shanghai) Trading Co., Ltd., believes that USD 60/MT is low point of iron ore price. Steel companies have a high degree of dependence on imported ore, especially driven by profits, the demand for high-grade ore is huge, forming price support. At the conference, Li Shubin, executive Vice President and Secretary-General of the China Association for the Utilization of Scrap Steel made a keynote speech. At present, China’s scrap steel application has entered a transitional period and the scrap cost has obvious advantages. The domestic demand for scrap will continue to rise.
Coal prices expected to remain on higher side- For another raw material coke, Shanghai Steel Coke analyst Xiong Chao believes that this year’s coking coal and coke market will be driven by environmental protection. The annual supply of coke will show a downward trend. The overall price is expected to operate at a high level. The profits of the coking industry will probably continue to show better turn than previous years. However the chairman of the China Coking Industry Association, Cui Minjiang, said that this year’s coking market in China will also be in an oversupply situation, and coking companies will continue to adjust and differentiate.
It should be noted that there are 455 large coking enterprises in the country and ,adding the semi-coke enterprises,there are roughly 500 companies with production capacity exceeding 600 million tons. Only a few companies can truly meet the ” pollutant discharge standards for coking industry.” Cui Xijiang believes that coking enterprises must have a sense of responsibility and urgency, and that their level of environmental protection governance should be unified with the country’s overall goals and a larger development pattern.
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