According to a new report issued by the China Iron and Steel Association (CISA), the demand for steel in China in January was sluggish due to the approach of the Chinese New Year holiday, the traditional offseason in the winter and the negative impact from the Covid-19 epidemic, while the expected improvement in demand after the long holiday has exerted a positive impact on steel prices in February. There are a number of factors that participants in the Chinese finished steel market should pay attention to in February, the CISA stated.
First of all, inventory levels of finished steel have increased. As of January 31, inventory of the five main finished steel products in 20 major cities in China amounted to 9.73 million mt, increasing by 1.38 million mt or 16.5 percent compared to January 20. As of February 10, finished steel inventory in China totaled 11.34 million mt, rising by 16.5 percent compared to January 31.
Secondly, according to CISA, the average daily crude steel output in China amounted to 2.1766 million mt in late January (January 21-31), down 1.87 percent compared to mid-January (January 11-20). But during the holiday, production posted some improvement.
Thirdly, the China Iron Ore Price Index (CIOPI) stood at $170.72/mt as of February 19, increasing by 7.01 percent compared to the beginning of the year, with the growth faster than that of 2.42 percent for the composite steel price index (CSPI) in the given period. The bigger rises in iron ore prices exerted a negative impact on steel enterprises’ profitability.
As for February, the demand for steel in both overseas and domestic markets will improve amid the better situation as regards tacking Covid-19 across the world and also given the resumption of production by downstream users. It is thought that steel prices in China will edge up.