According to a new report issued by the China Iron and Steel Association (CISA), demand for steel in China was still good in March, positively affecting steel prices, resulting in an uptrend in steel prices, while steel prices indicated a downward correction in April following previous rises.
There are a number of factors that participants in the Chinese finished steel market should pay attention to in April, the CISA stated.
First of all, inventory levels of finished steel have decreased. As of March 31, finished steel inventory in China amounted to 14.7068 million mt, decreasing by 2.8021 million mt or 16.0 percent compared to March 20, while inventory rose by 5.36 percent as of April 10 compared to March 31, with the increasing inventory exerting a negative impact on steel prices.
Secondly, according to the National Bureau of Statistics (NBS), in March this year China’s crude steel and finished steel outputs reached 74.75 million mt and 94.02 million mt, respectively, up 8.9 percent and 19.1 percent year on year, while the average daily crude steel output of all steelmakers in China amounted to 3.0329 million mt in the given period, up 2.3 percent compared to the figure recorded for the January-February period this year.
Thirdly, the China Iron Ore Price Index (CIOPI) stood at $176.39/mt as of April 16, increasing by 110.34 percent year on year, much faster than the growth observed for steel prices. Iron ore, scrap and coking coal prices are at high levels, which will negatively affect Chinese steelmakers’ profitability in the future.
The World Health Organization (WTO) stated last week that new Covid-19 cases per week nearly doubled globally over the past two months, approaching the highest infection rate since the outbreak of the pandemic, and this is expected to negatively impact economic recovery. Moreover, China’s export tax rebates are expected to be cut, which will create huge difficulties for steel exports.
Currently, demand for steel is in its peak season, which will bolster steel prices amid expected production restrictions. However, the previous quick rises in steel prices may limit the increases that will be recorded in the near future. It is thought that China’s steel prices will fluctuate within a limited range up to the end of April.