According to a new report issued by the China Iron and Steel Association (CISA), due to the worsening Covid-19 pandemic in some regions of China and the impact of the Chinese New Year holiday, demand for steel in China has been slack, while the Winter Olympics and winter production restrictions also exerted a negative impact on steel production, resulting in the weakness of both supply and demand in January.
On February 10 this year, overall domestic inventories of the five main finished steel products in 20 major cities in China totaled 12.36 million mt, up 2.73 million mt or 28.3 percent compared to January 31. As of February 10, the finished steel inventories of large and medium-sized steel enterprises in China amounted to 16.85 million mt, increasing by 3.17 million mt or 23.2 percent compared to January 31.
The demand for steel will likely improve in February and March as China has taken measures to ensure steady economic development. However, iron ore, coking coal, coke and scrap prices are still at relatively high levels, which will exert a negative impact on steel enterprises’ profitability.
Since February and March form the traditional peak season for the steel industry in China, steel prices rise in the coming period.