Posted on 24 Sep 2021
Chinese domestic steel prices are expected to remain rangebound in the coming term as supply and demand are generally balanced, according to the latest monthly report of the China Iron & Steel Association (CISA) released on September 18.
Domestic steel demand is likely to weaken in the weeks ahead with the increasingly grim international situation and slowing domestic economic growth, CISA warned.
CISA quotes the latest United Nations data released on September 15 as showing that global economic growth could fall to 3.6% in 2022 from this year’s anticipated 5.3%, as the uneven recovery in different regions may drag down overall growth globally.
China’s domestic economy is also under downward pressure amid the signs of weakness in real estate investment and the issuance of local bonds. At the same time, Chinese orders for industrial machinery have steadily declined, and automotive production and sales have also posted on-year decreases, pointing to softening steel demand in the domestic market.
China’s crude steel output is expected to continue its on-year fall in the coming term with Beijing’s series of measures to lower steel production for 2021 such as the rechecking of steel capacity reductions as part of on-going curbs among steelmakers, and the restrictions on energy use among industries blamed for high emission levels and high energy consumption.
During August, China’s average daily crude steel output fell for the fourth straight month to 2.69 million tonnes/day, down another 4.1% on month. The total volume for August dropped by 13.2% on year to 83.2 million tonnes, said CISA, quoting data from the country’s National Bureau of Statistics.
A new equilibrium is expected to emerge between supply and demand with the slowdown in both sides, CISA pointed out, suggesting that domestic steel mills should analyse the market changes and adjust their product structures accordingly to maintain the stability of steel prices.
China’s steel mills still face great pressure to lower their production costs with the sharp growth in coking coal and coke prices. As of September 10, the price of coking coal was at Yuan 3,740/tonne ($578/t), up 18.4% from the end of August, and that of coke had increased by 14.4% during the same period to Yuan 3,804/t, according to the association. Over that period, steel prices only grew 1.3%, far below the growth in prices of coking coal and coke, CISA noted.
Source:Mysteel Global
