According to a new report issued by the China Iron and Steel Association (CISA), the declining pace of steel prices in China continued in December, but slowed down, and steel prices will likely show small fluctuations in the near future against the backdrop of the worsening of the Covid-19 pandemic in many regions of China, production restrictions during the winter season, and the approaching Winter Olympics.
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 increased. As of January 20, overall domestic inventories of the five main finished steel products in 20 major cities in China totaled 8.74 million mt, up 810,000 mt or 10.2 percent compared to January 10.
Secondly, according to the data issued by China’s National Bureau of Statistics (NBS), China’s crude steel output amounted to 86.19 million mt in December, down 6.8 percent year on year, while the sluggish demand from downstream users in the given period made the market more balanced.
Thirdly, the China Iron Ore Price Index (CIOPI) stood at $118.94/mt as of December 31, decreasing by 25.45 percent year on year, while rising by 17.23 percent month on month. Though iron ore prices indicated an uptrend in the given period, coking coal and coke prices saw month-on-month declines. Nevertheless, in January coking coal prices resumed a rising trend and iron ore prices also improved visibly, and so costs will support steel prices in China in the near future.
China aims to focus on stability in 2022, which will exert a positive impact on the steel market from a macroeconomic perspective. However, as the Chinese New Year is approaching, steel prices may move sideways up to mid-February.