In the near term, China’s domestic steel prices are likely to be rangebound instead of rising sharply, as the downstream industries are finding it hard to fully accepted the substantial and rapid price rises earlier on, the China Iron & Steel Association (CISA) shared in its latest monthly report.
“China’s steel prices are likely to remain stable, as demand has been in a peak season, while steel output has been curtailed on restrictions out of pollution control, and steel exports have rebounded,” CISA commented briefly.
Steel demand both in and out of China may incline further for the rest of 2021 with the further recovery in the global economy, and China’s further investments may trigger greater demand for machinery and steel, it added.
In the latest forecast released on April 6, International Monetary Fund expected the global economy to grow 6% for 2021, higher than the 5.5% in January, and the World Steel Association expected global steel demand to grow 5.8% this year in its latest Short Range Outlook released on April 15, and China’s steel demand may grow 3% on year, as reported.
Besides, the pressure from the finished steel stocks on the domestic steel prices is easing, as by April 10, stocks of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate at China’s 20 cities reduced to 15.22 million tonnes by April 10, down 2.8 million tonnes or 15.6% on year or 2.55 million tonnes lower from the year’s high, CISA shared.
Other than the positive signs, CISA warned of the few issues in the steel market, such as that the domestic steel output has persisted high, up 15.6% on year to 271 million tonnes for January-March, which will test the market fundamentals and being far from the government’s requirement on lower steel output.
The Chinese steel mills, at the same time, will be under the persistent pressure in production cost control, as the prices of steelmaking raw materials have been hovering high, and as of April 16 the 62% Fe iron ore price was at $176.39/t, or up 110.3% on year, much higher than the on-year growth in steel prices.
Besides, China’s steel exports may face obstacles due to the uncertainties in the global economy because of the surges in the confirmed COVID-19 cases worldwide as well as the possibility for China to adjust its export tax rebates, CISA added.
Written by Nancy Zheng, zhengmm@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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