Steel Prices / Market Analyses

CISA: Rapid rises in steel prices harmful to steel industry development

In an interview with Chinese media, Gu Jianguo, deputy chairman of the China Iron and Steel Association (CISA) and Wang Yingsheng, deputy secretary general of the CISA, have discussed the current situation of rapidly rising prices in the Chinese steel market, where some producers’ long product prices have surged above RMB 5,000/mt ($756/mt).

Mr. Wang stated that the rapid rises of finished steel prices in the short term will cause downstream users and traders to lower their inventories and to avoid inventory replenishment. He said that, given the colder winter conditions, more and more construction sites will halt their activities, while sales of finished steel in the winter season are usually mostly due to inventory replenishment by traders and downstream users, but if finished steel prices continue to rise quickly, both traders and users will lower inventories, resulting in reduced steel sales, which will not be good for the overall market. Moreover, he commented, rapid rises in finished steel prices will push up prices of coke, iron ore and coking coal, which will also have a negative impact on the steel industry.

CISA deputy chairman Gu stated that the big rises seen in finished steel prices within a short period will do harm to the development of the steel industry and will likely result in losses in both the steel industry and in downstream industries. He suggested that giant steelmakers and large traders should strive to maintain market stability, instead of pushing up finished steel prices significantly only on the back of the expected impact of the production cuts implemented within the scope of environmental protection measures.

*This was published on SteelOrbis website on December 6, 2017.

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