Posted on 21 Jul 2023
Chinese steel prices have decreased slightly so far this month, mainly blamed to the imbalance between supply and demand, and the uncertain factors in both local and overseas markets, according to the latest monthly report of the China Iron & Steel Association (CISA).
Last month, the growth in the apparent consumption of crude steel was lower than the rise in crude steel output, suggesting that the steel supply was stronger than demand, the association pointed out.
For June, China's daily crude steel output averaged 3.04 million tonnes/day, jumping 4.5% compared with the prior month, or higher by 0.4% on year, CISA quoted the data from the country's National Bureau of Statistics. However, daily crude steel apparent consumption for June just increased by 2.2% on month, or 0.3% on year, according to report.
Steel inventories held by domestic steelmakers and traders accumulated this month, indicating the greater pressure from the supply side, CISA noted.
By early July, total inventories of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by CISA's member mills had mounted to 15.9 million tonnes, higher by 1.12 million tonnes or 7.6% from the end of June.
During the same period, total volume of the five items stocked in the 21 Chinese cities under CISA's survey climbed by 120,000 tonnes or 1.3% to 9.37 million tonnes.
Domestic steel demand is unlikely to see a significant recovery in the near term with the persistent weakness in the country's property market and the slowing growth in consumption from the manufacturing and Infrastructure sectors, the association warned.
In parallel, the prices of imported iron ore still hovered high, making it more difficult for Chinese steelmakers to reduce their production costs, CISA said in the report.
However, China's macro economy is expected to run smoothly in the coming term with the central and local governments rolling out a series of stimulus measures, which may boost domestic steel demand to some extent.
Besides, the rising prices of steelmaking raw materials may also lend some support to domestic steel prices, the association predicted.
As of July 14, the prices of domestically-mined iron ore concentrates and scrap gained by 1.1% and 0.6% respectively on month, and those of coking coal and metallurgical coke also increased by 2.8% and 2.7% during the same period, the report showed.
Source:Mysteel Global
