According to a new report issued by the China Iron and Steel Association (CISA), demand for steel in China improved further in August and pushed up steel prices, while a quick capacity release exerted negative pressure on steel prices, slowing down the growth of prices. There are a number of factors that participants in the Chinese finished steel market should pay attention to in September, the CISA stated.
First of all, inventory levels of finished steel have decreased. As of August 31, finished steel inventory in China amounted to 12.37 million mt, declining by 0.76 million mt or 5.79 percent compared to July 31, but increasing by 2.84 million mt or 29.76 percent compared to the beginning of the year.
Secondly, in the September 1-10 period of this year, the average daily crude steel output of CISA-member steelmakers in China amounted to 2.1366 million mt, remaining at a high level, signaling bigger pressure on the demand and supply situation in the steel industry in the future. Thirdly, the China Iron Ore Price Index (CIOPI) stood at $128.9/mt as of September 14, increasing by 40.46 percent compared to the beginning of the year, while the steel price index (CSPI) only increased by 0.98 percent during the given period. The rapid rise in iron ore prices negatively affected steel enterprises’ profitability.
Steel imports increased significantly in the given month, exerting a negative impact on the local steel market. The Covid-19 pandemic in overseas markets reduced the demand for steel in the global market.
Though the September-October period is regarded as the peak season for steel demand in China, supply in the steel market will be high amid increasing imports of finished steel and billet and relatively high production in China, which will negatively affect steel prices to some extent.