According to a new report issued by the China Iron and Steel Association (CISA), there are three factors that participants in the domestic finished steel market should pay attention to in the coming period.
First of all, steel producers will have to strictly implement production cuts and elimination of low-grade construction steel, which will prevent big fluctuations in finished steel prices.
Secondly, as of February 9, the composite steel price index (CSPI) for the Chinese domestic market decreased by 5.75 percent compared to the end of 2017, while the China Iron Ore Price Index (CIOPI) rose by 2.96 percent in the same period. The increases in import iron ore prices have deviated from the trend of finished steel prices and so iron ore prices are unlikely to continue to rise, especially taking into account the oversupply of ore.
Thirdly, in January, China’s finished steel export volume amounted to 4.65 million mt, down 37.3 percent year on year. As for 2018, protectionism in the international market will negatively affect Chinese finished steel exports.
Currently, market participants mostly hold an optimistic view of the future prospects for the market. However, demand and supply are essentially balanced, and so finished steel prices are unlikely to indicate large increases, but will fluctuate slightly in the coming period.