According to a new report issued by the China Iron and Steel Association (CISA), in the January-September period this year China’s crude steel output amounted to 603.78 million mt, up 0.4 percent year on year, while China’s apparent consumption of crude steel totaled 525.65 million mt, increasing by 0.1 percent year on year, reflecting the ongoing oversupply situation in the domestic finished steel market.
According to the CISA’s report, as of the end of September this year overall domestic inventories of the main finished steel products in China totaled 9.41 million mt, up 0.56 percent month on month and rising by 9.15 percent compared to the beginning of the current year. In September this year, China’s finished steel exports decreased to 8.80 million mt, down 2.13 percent month on month and declining by 21.8 percent year on year. In addition, there is an increasing number of antidumping (AD) investigations against China’s steel exports, which will exert negative pressure on the domestic finished steel market from the supply side.
As also indicated by the CISA, as of October 12 this year, the coking coal price in China increased by RMB 537/mt ($79.32/mt), rising by 86.20 percent compared to the beginning of this year, while the composite steel price index (CSPI) for the Chinese domestic market only increased by 40.15 percent, exerting negative pressure on the margins of steel producers.
Prices of coking coal and coal in China have risen since late September, providing support for increases in domestic finished steel prices. Against the backdrop of the approach of cold weather in China’s northern region and the domestic policy on capacity elimination, it is thought that finished steel prices in China will likely indicate some slight fluctuations in the coming period.