According to a new report issued by the China Iron and Steel Association (CISA), there are a number of factors to which participants in the Chinese finished steel market should pay attention in the coming period.
First of all, inventory levels of finished steel in China declined in April. As of the end of the April, finished steel inventory amounted 15.62 million mt, down 4.11 million mt or 20.85 percent compared to the end of March. In May, finished steel inventories have continued to decrease. As of May 10, inventory amounted to 14.89 million mt, down 0.75 million mt or 4.85 percent compared to the end of April. The decreases in finished steel inventories will positively affect finished steel prices in the future.
Secondly, in April, the average daily crude steel output in China amounted to 2.8343 million mt, up 12.7 percent year on year and rising by 9.4 percent month on month. The CISA considers that the rapid rises in crude steel output will exert a negative impact on the finished steel market and urged steelmakers to pay attention to production volumes.
Thirdly, the China Iron Ore Price Index (CIOPI) stood at $94.93/mt as of May 16, up 37.52 percent compared to the start of the year, while rising by 36.6 percent year on year. The more rapid rises in import iron ore prices have negatively impacted steelmakers’ profitability.
Fourthly, the US has announced a hike in tariffs on Chinese commodities valued $200 billion from 10 percent to 25 percent, negatively influencing the financial and commodities markets. China’s steel exports will likely face more uncertainties in the future.
The CISA report indicated that finished steel prices in China are not expected to indicate big increases, but will likely fluctuate within a limited range.