According to a report released by the China Iron and Steel Association (CISA) on June 16, in the January-May period of this year the main domestic steel consuming industries have seen declines in growth, while no significant improvement has been observed in demand for steel.
According to the CISA's report, China's apparent consumption of finished steel amounted to 301 million mt in the January-May period this year, down 5.1 percent year on year, while China's crude steel output in the given period totaled 340 million mt, declining by 1.6 percent year on year, with the declines in demand bigger than the decreases in output.
Meanwhile, overall domestic inventories of the five main finished steel products in China as of the end of May totaled 12.90 million mt, down 5.51 percent month on month and indicating a decrease of 9.41 percent year on year. As of June 12, inventory levels had dropped further to 12.77 million mt, with the declines in inventory reflecting the lack of confidence in the future prospects for the market.
According to the CISA, considering that iron ore prices have indicated a rebound, finished steel prices, which have been declining, will likely gain support from the cost side. However, demand for finished steel will remain sluggish due to rainy weather and high temperatures, which will drag down steel prices, and thereby also impact iron ore prices negatively. The CISA stated that domestic finished prices will indicate minor downward fluctuations in the coming period.