China's Ministry of Commerce (MOC) said on November 17 that domestic finished steel prices continued to increase slightly for two consecutive weeks due to the decreased inventories and reduced production. Over the past week ending on November 14, domestic finished steel prices in China have increased by three percent compared to the previous week.
MOC stated that the decline of production was among the factors of the recent price increase. Due to the intensive measures of energy saving and emission reduction implemented by central government, China's output of finished steel products have continued to fall. The data of China Iron and Steel Association (CISA) indicated that China's daily crude steel output reached 1.586 million mt in October this year, down two percent month on month. Another factor is the rising cost of production. According to monitoring report, as of November 12, the prices of domestic iron ore and coal have increased by 4.7 percent and 1.5 percent respectively from the last ten days of October. The third factor is that inventories have declined significantly. Relevant survey showed that the nationwide inventories of finished steel products as of November 12 had declined by 2.2 percent compared to the previous week, down 8.3 percent compared to the same time of the previous month. In the given period, the inventory level of steel products used in construction has declined by 15.9 percent compared to the same period of the previous month.
MOC forecasted that with the approaching of winter, demand for construction steel will weaken. As a result, the distributors and end-user will be reluctant to purchase and the steel prices may stop rising and enter stable trend in the near-term.