According to a new report issued by the China Iron and Steel Association (CISA), steel prices in China in September shifted from a downward trend to an uptrend amid restrictions on energy consumption which resulted in declining steel output and expectations of tight steel supply for the near future.
There are a number of factors that participants in the Chinese finished steel market should pay attention to in October, the CISA stated.
First of all, inventory levels of finished steel have increased. As of October 10, the finished steel inventories of large and medium-sized steel enterprises in 20 major cities in China amounted to 10.85 million mt, increasing by 200,000 mt or 1.9 percent compared to September 30, while down 14.2 percent compared to the same time last year.
Secondly, according to the CISA, CISA members’ average daily crude steel output amounted to 1.7688 million mt in the September 21-30 period, down 11.18 percent from mid-September, while reaching 1.8732 million mt the October 1-10 period, up 5.9 percent from late September, signaling steelmakers’ resumption of production following the long National Day holiday.
Thirdly, the China Iron Ore Price Index (CIOPI) stood at $118.58/mt as of September 30, decreasing by 22.14 percent month on month, while up 2.82 percent year on year. Though import iron ore prices declined, coking coal and scrap prices increased, pushing up steelmakers’ production costs.
It is expected that China’s steel prices will fluctuate within a limited range as demand for steel will slacken when the weather gets colder, while central government aims to reduce steel output for the full year of 2021, which will bolster steel prices due to limited supply.