According to a new report issued by the China Iron and Steel Association (CISA), the steel prices in June have indicated a downward trend, while steel output has seen a slight decline. There are a number of factors that participants in the Chinese finished steel market should pay attention to in the July, the CISA stated.
First of all, inventory levels of finished steel have increased. As of July 10, the finished steel inventories of large and medium-sized steel enterprises in China amounted to 14.06 million mt, increasing by 290,000 mt or 2.1 percent compared to June 30.
Secondly, according to CISA, China’s average daily crude steel output is estimated to reach 2.9887 million mt in the July 1-10 period, continuing the downtrend compared to the previous period (June 21-30). The crude steel output will likely indicate further declines in the second half of the current year, which will bolster steel prices.
Thirdly, the China Iron Ore Price Index (CIOPI) stood at $219.63/mt as of July 16, increasing by 108.99 percent year on year, while steel prices rose by 44.4 percent in the given period, far less than the growth in iron ore prices. The quick rises in iron ore prices negatively affected steel enterprises’ profitability.
Due to the lift of tax rebate as of May 1st this year, the steel exports will continue to be difficult in the future.
It is expected that China’s steel prices will move up in July amid the prevailing bullish sentiments among market players due to the support from rising ferrous metal futures prices and expected production restrictions.
