According to the report of the China Iron and Steel Association (CISA) published on August 18, in the second half of the current year an improvement will be seen in the lack of equilibrium between supply and demand for steel products, though the oversupply situation will continue to exist. The overcapacity in the steel industry will make it hard to increase finished steel prices, which are expected to fluctuate slightly in the second half of the year.
The CISA continued by saying that the Chinese macroeconomy is developing in the expected direction, and that the stable macroeconomic policy will ensure positive economic development and that finished steel demand will see a stable increase.
As to the export rebate cancellation and backward capacity elimination, the CISA said that the recent export rebate cancellation, effective as of July 15, had an influence on 45 percent of China's total finished steel export volume. The above factors will limit the country's finished steel export volume in the future, placing great pressure on the Chinese domestic market.
The policy to eliminate backward capacity will ease the imbalance of supply and demand in the domestic steel market. According to the CISA data, at the end of July inventory in 26 major Chinese steel markets totaled 14.54 million mt, down 0.78 million mt or 4.95 percent month on month. As for the various steel categories, long steel inventory dropped considerably,with rebar and wire rod inventory down 9.32 percent and 14.98 percent respectively; HRC and CRC inventory increased by 14.39 percent and 1.58 percent respectively; and medium plate inventory dropped by 6.71 percent, all compared to the end of June.