The China Iron and Steel Association (CISA) has held a meeting of representatives of major steelmakers, futures exchanges, futures trading brokers and steel industry news portals to discuss the rapid rises seen recently in China in finished steel prices, ferrous metal futures prices and steel company share prices.
The attendees agreed that the sharp rises seen in finished steel futures prices were not due to improved demand or to significant declines in supply, but due to the excessive importance attributed by some futures brokers and news portals to capacity elimination, the shutdown of low-grade construction steel production and air pollution control plans.
In particular, the widely-reported blast furnace output cuts for the coming winter season (November 2017-March 2018) announced by the authorities in Hebei Province have contributed significantly to the rapid rises seen in finished steel prices. However, the CISA stated that the reading of the steel market on the part of some observers has not been objective, but has been one-sided, and this has amplified the impact of environmental protection policy on steel supply.
The representatives of the steelmakers stated that they do not want to see wide-ranging fluctuations in finished steel prices, as the rapid rises in steel prices will push up raw material prices, which may sometimes increase at stronger rates than finished steel prices. They affirmed that they prefer to see a steadier movement of steel prices instead of rapid fluctuations.