Posted on 23 Mar 2023
China's steel prices are likely to keep rangebound for the foreseeable future, as the warming spring weather should see domestic steel demand kick in and keep stable, according to the latest monthly report released by China Iron & Steel Association (CISA) on March 21.
China's economy is expected to recover this year and economic growth is projected to reach 5%, underscoring the central government's confidence in the country's development in the medium- and long-term.
Meanwhile, Beijing has introduced a series of fiscal and monetary policies to support key construction projects, the association noted, adding that the steady expansion of the real estate industry should also boost demand for construction steel.
However, domestic steel production has picked up this year, which may not be conductive to maintaining the balance between supply and demand in the domestic steel market, CISA warned. The growth in demand is likely to be limited with the impact of the still depressed property market, despite March-April usually being peak months for steel consumption.
Over January-February, China's daily crude steel output averaged 2.86 million tonnes/day, jumping by 13.8% from that for last December, the association said, quoting data from the country's National Bureau of Statistics.
In order to maintain the balance between supply and demand, Chinese steel producers should analyse the market's dynamics and arrange production reasonably.
Chinese steel mills also face great pressure from the cost side, as the higher prices of major steelmaking raw materials have lifted the production costs of domestic steelmakers, CISA pointed out.
As of March 10, the price of domestically-mined iron ore concentrates had increased to Yuan 1,007/dmt ($146/dmt), higher by Yuan 85/dmt or 9.2% from the beginning of this year, while the growth in steel prices was only 5.3% during the same period, according to the release.
Besides, prices of other steelmaking raw materials such as ferrous scrap and coal also hovered high, putting more pressure on domestic steel mills to reduce their costs. As of March 10, the price of domestic scrap was 0.6% higher compared with the end of February, and that of coal had increased by 2% during the same period, the release showed.
Source:Mysteel Global
