Posted on 22 Dec 2021
Chinese steel prices are expected to remain rangebound in the coming term due to the weakness of both demand and supply, according to the latest monthly report of the China Iron & Steel Association (CISA) released on December 20.
"Domestic steel demand could stay weak at the end of the year, while steel output is likely to remain at a low level with the production curbs imposed on steel mills in the winter heating season," CISA pointed out in the report.
The association mainly attributed the overall weak demand to slowing growth among major steel - consuming industries such as infrastructure and property development - where investment is lagging - and industrial machinery manufacturing, despite the slight recovery in business.
However, a new balance will emerge in supply and demand in the coming term as crude steel output may stay low, the report said. Output may dip due to restrictions placed on mills' production to improve air quality when Beijing hosts the Winter Olympic Games in February and the 'Two Sessions' political meetings in March, CISA noted.
During November, China produced 69.31 million tonnes of crude steel, lower by 22% from one year earlier, with daily crude steel output averaging 2.31 million tonnes/day, almost unchanged from the October average, CISA said, quoting data from the country's National Bureau of Statistics.
Besides, total inventories of the five steel major products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate in the country's 20 cities surveyed by the association slipped by 4.4% from late November to 8.27 million tonnes as of December 10. The total stocks held by CISA's member mills increased 6.9% during the same period to 13.34 million tonnes, leading CISA to suggest that prices are unlikely to experience large fluctuations as traders' stocks have declined further, even though mills' inventories have climbed.
Chinese steelmakers are still under great pressure to reduce their production costs due to the recovery in prices of imported iron ore and scrap this month, CISA warned. As of December 10, prices of imported iron ore and scrap had gained 3.1% and 1.9% respectively from the end of November, the association noted.
CISA suggested that domestic steelmakers pay more attention to Beijing's series measures to stabilize the economy in 2022 and arrange their production reasonably to keep domestic steel prices stable.
Source:Mysteel Global
