CISA: China’s steel prices to fall in Aug, output cuts may prevent sharp drops later

Thursday, 19 August 2021 11:57:57 (GMT+3)   |   Shanghai
       

According to a new report issued by the China Iron and Steel Association (CISA), steel prices in China in July indicated an uptrend, shifting from a decline recorded in June, amid the decreasing crude steel output in the given month due to strict production restrictions.

The situation in China has worsened in August due to poor demand, but during the rest of 2021 tight production restrictions may prevent prices from recording a big drop, according to CISA.

There are a number of factors that participants in the Chinese finished steel market should pay attention to in the late August-early September period, the CISA stated.

First of all, inventory levels of finished steel have decreased. As of August 10, the finished steel inventories of large and medium-sized steel enterprises in 20 cities of China amounted to 11.91 million mt, decreasing by 120,000 mt or 1.0 percent compared to July 10, while down 4.0 percent compared to the same period of last year. This was due to lower production.

According to CISA, CISA members’ average daily crude steel output amounted to 2.0439 million mt in the August 1-10 period, down 4.4 percent year on year, indicating a continuous year-on-year decline since late July. Crude steel output will likely indicate further declines as China’s central government has reiterated that China’s crude steel output will realize a year-on-year drop in 2021. Accordingly, steel prices are unlikely to indicate a sharp decline in the future.

Thirdly, the China Iron Ore Price Index (CIOPI) stood at $179.12/mt as of July 31, increasing by 65.79 percent year on year, while decreasing by 17.66 percent month on month. While the relatively high level of iron ore prices has bolstered steel prices, they have room to go down further.  

It is thought that China’s steel prices will fluctuate within a limited range in August amid the slack demand during the traditional offseason, while steel prices in the country may edge up during the rest of year due to the expected decline in output.


Similar articles

CISA urges mills to reduce capacity utilization as recent cuts insufficient

29 Mar | Steel News

Local Chinese stainless steel prices mostly decrease

28 Mar | Flats and Slab

MOC: Average steel prices in China down slightly during Mar 18-24

28 Mar | Steel News

Chinese steel pipe export offer prices edge down slightly

27 Mar | Tube and Pipe

Chinese steel enterprises’ gross losses total RMB 14.61 billion in Jan-Feb

27 Mar | Steel News

Chinese manganese ore prices mostly remain stable, with some downticks  

27 Mar | Scrap & Raw Materials

Ex-China stainless steel prices edge down

26 Mar | Flats and Slab

China’s coking coal imports up 36.52 percent in January-February

26 Mar | Steel News

CISA mills’ daily steel output down 0.51 percent in mid-March

26 Mar | Steel News

Ex-China steel plate prices down slightly despite stronger local market

25 Mar | Flats and Slab