Posted on 02 Sep 2020
Both the fundamentals and market sentiment will be lending support to China’s steel prices in general and rebar in particular in September, and coke and scrap prices may stay on their uptrends while iron ore price may recede from the highs, Wang Jianhua, Mysteel’s chief analyst shared his near-term outlook on September 1.
As for prices, steel prices especially rebar, may stand the chances for rises with the remaining high raw material costs despite declines, the support from the higher flat steel prices and better demand, he highlighted.
China’s steel prices, however, had been on an uptrend in general for four consecutive months, which has been a rather long duration even in the context of history, so the market should be beware of the risks, he added.
This month, China’s domestic demand for steel, with construction steel in particular, may grow on month, as the demand from Xinjiang may grow 1 million tonnes when the pandemic outbreak is under control, reconstruction works after the heavy rainfalls and flooding may generate another 1 million tonnes of steel, and newly-launched construction project will lead to another 1.5 million tonnes of steel demand, according to him.
Besides, the country’s machinery industry, a key steel consumer, will see the remaining high orders from both home and abroad, as the global manufacturing PMI has returned to the expansion zone starting July, and the demand for electrical home appliances have been on the rise too both for the dometic sales and exports.
For August, China’s excavator sales including domestic and overseas markets may reach 20,800 units, or up 50% on year, and some manufacturers have had secured orders even for their October production, Wang shared, adding that the recovery in global trade also saw the growth in demand for container steel.
The daily construction steel trading volume, despite having stayed largely flat from July due to less-than-expected demand recovery on month, still grew 14.6% on year, according to Mysteel’s market survey.
China’s steel market sentiment, thus, is likely to be boosted by the expectation of steel stocks declines on better demand, and China’s total stocks of the five major steel products including longs and flats may reduce by 2 million tonnes, according to Wang.
As for domestic steel supply, the remaining positive but low steel margins will suffice to maintain the production enthusiasm among the Chinese steel mills but not to seek evem higher output especially when their production costs will be higher on month in September due to the iron ore price spikes in August, he pointed out.
By August 28, the average rebar margin in China was assessed at Yuan 41/tonne ($6/t) and hot-rolled coil at Yuan 177/t for integrated mills, while the rebar margin for the electric-arc-furnaces averaged only Yuan 22/t, according to Mysteel’s research institute.
Besides, China’s pollution control efforts in some major steelmaking areas including Tangshan of Hebei, Linfen of Shanxi in North China, and Anyang of Henan in Central China, will see their local steel production being curtailed to some degree this month, Wang pointed out.
Source:Mysteel Global
