According to a new report issued by the China Iron and Steel Association (CISA), there are a number of factors that participants in the Chinese finished steel market should pay attention to in the coming period.
First of all, inventories of finished steel in China have increased. As of the end of January 25, finished steel inventories in China amounted 11.90 million mt, up 2.45 million mt or 25.87 percent compared to the start of the year. As of February 1, finished steel inventories showed a more rapid increase, amounting to 13.62 million mt, up 4.17 million mt or 44.04 percent from the start of the year.
Secondly, China will implement further supply-side reforms in 2019. Meanwhile, China’s economy will come under downward pressure, which will negatively affect demand for finished steel.
Thirdly, due to the dam collapse in Brazil, import iron ore prices have indicated rapid rises, which will increase the pressure on Chinese steelmakers from the cost side.
Fourthly, although China’s finished steel exports increased by 33.3 percent year on year in January, China will still face a tough situation with regard to exports in 2019 due to ongoing trade protectionism.
The CISA report concluded by saying that in the coming period finished steel prices in China are unlikely to indicate big rises, but will likely to continue to fluctuate within a limited range against the backdrop of the offseason amid rainy weather conditions in most regions of China.