According to a report released by the China Iron and Steel Association (CISA) on May 18, although China's economy has been under some pressures in the January-April period of the current year, some positive signs could also be observed, such as the 20.4 percent year-on-year rise in fixed asset investment in infrastructure in the given period. Meanwhile, China's central bank has cut benchmark interest rates twice in the current year in a bid to stimulate economic activity, with this likely to provide support for finished steel demand.
However, oversupply still exists and this will restrict the upward movement of finished steel prices. According to the CISA's report, China's apparent consumption of finished steel amounted to 240 million mt in the January-April period, down 5.1 percent year on year, while China's crude steel output totaled 270 million mt, down 1.3 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 April totaled 13.65 million mt, down 10.30 percent month on month and indicating a decrease of 18.30 percent year on year. As of May 8, inventory levels dropped further to 13.38 million mt, with the declines in inventory reflecting market participants' lack of confidence as regards the future prospects for the steel market.
The CISA concluded by stating that, if demand and confidence do not improve in the near future, China's finished steel prices are unlikely to see significant rises.