Measures announced by China’s central government to stabilize the economy should keep the country’s steel demand stable for the foreseeable future, though the complex international situation and the impact of COVID controls at home may place more pressure on the steel demand recovery, according to the latest monthly report of the China Iron & Steel Association (CISA).
China’s economy is likely to recover further in the weeks ahead, as Beijing will continue to coordinate pandemic control measures with economic development, and will intensify efforts to implement economic stabilization policies, which may help to keep steel demand stable, the association noted.
Meanwhile, a new balance between supply and demand may emerge with the decrease in steel supply, CISA predicted.
Over the first ten days of November, daily crude steel output among CISA’s member mills averaged 1.99 million tonnes/day, down 2.1% from that during late October, while daily finished steel output also dropped by 9.1% to 1.92 million t/d during the same period.
Steel inventories at traders’ warehouses have decreased steadily, while the volume held by Chinese steelmakers accumulated somewhat in early November, the association pointed out.
As of November 10, inventories of five key steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil, and medium plate in 21 Chinese cities under CISA’s survey slipped to 7.8 million tonnes, down 6.6% from the end of October. During the same period, the volume of these five major products held by CISA’s member mills mounted slightly by 1.5% to 16.7 million tonnes.
The balance between supply and demand will be crucial to the domestic steel market in the coming term. CISA suggested that Chinese steel producers should take the initiative to maintain the stability of the domestic steel market, given the delicate balance between supply and demand.
Besides, the rebound in iron ore prices has put more pressure on domestic steel mills to lower their production costs, CISA warned. As of November 16, the average price of imported iron ore in China had increased to $97.32/tonne, up $17.94/t or 22.6% compared with the end of October, according to the report.
Written by Nancy Zheng, zhengmm@mysteel.com
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