According to a new report issued by the China Iron and Steel Association (CISA), the demand for steel in China in November was at decent levels, exerting a positive impact on steel prices, while colder weather will exert a negative impact on steel prices in December. There are a number of factors that participants in the Chinese finished steel market should pay attention to in the coming period, the CISA stated.
First of all, inventory levels of finished steel have decreased. As of November 30, the finished steel inventories of large and medium-sized steel enterprises in China amounted to 11.3721 million mt, decreasing by 1.1978 million mt or 9.53 percent compared to November 20.
Secondly, according to the National Bureau of Statistics (NBS), China’s crude steel and finished steel outputs totaled 87.66 million mt and 117.34 million mt in November, up 8.0 percent and 10.8 year on year, respectively, while the average daily crude steel output of all steelmakers in China amounted to 2.922 million mt in November this year, down 1.7 percent month on month.
Thirdly, the China Iron Ore Price Index (CIOPI) stood at $155.15/mt as of December 11, increasing by 71.4 percent compared to the beginning of the year, hitting a historically high level. The sharp rises in iron ore prices exerted a negative impact on steel enterprises’ profitability.
In November, demand for steel was at decent levels, while steel prices moved up amid the continuous rises in raw material prices. As the weather will get colder and colder, demand for steel will slacken, which will likely result in steel prices fluctuating on a slightly soft trend.