According to a new report issued by the China Iron and Steel Association (CISA), the declining pace of steel inventories in the spot market in China has slowed down, while the inventory on the steelmakers’ side has increased, signaling that steel prices will come under some pressure, though they are unlikely to indicate big declines and will fluctuate within a limited range instead amid lower production.
On December 10 this year, overall domestic inventories of the five main finished steel products in 20 major cities in China totaled 8.27 million mt, down 380,000 mt or 4.4 percent compared to November 30. As of December 10, the finished steel inventories of large and medium-sized steel enterprises in China amounted to 13.3425 million mt, increasing by 858,200 mt or 6.87 percent compared to November 30.
In February 2022, the Winter Olympic Games will be held in Beijing and Zhangjiakou, while in March there will be an important conference held in Beijing, and so production restrictions this winter will be very strict, which will reduce crude steel output, and this in turn will bolster steel prices.
According to the Central Economic Working Conference held recently, China will ensure a stable macroeconomic environment, with policies being issued gradually in the near future, which will provide support for the steel industry.
Moreover, as of December 10, the import iron ore prices, domestic production iron ore concentrate prices and scrap prices have risen by 3.13 percent, 1.25 percent and 1.92 percent respectively compared to the end of November. Coking coal and coke prices have continued to decline, while the declining pace has slowed down, which will exert a negative impact on steelmakers’ profitability.
