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, inventory levels of finished steel decreased in May. As of the end of the May, finished steel inventory in China amounted to 13.47 million mt, down 2.15 million mt or 13.75 percent compared to the end of April. As of June 14, inventory of finished steel totaled 13.63 million mt, up 160,000 mt or 1.17 percent compared to the end of May. The decreases in finished steel inventory will negatively affect finished steel prices in the future.
Secondly, in May, average daily crude steel output in China amounted to 2.8743 million mt, up 1.4 percent month on month. The CISA considers that the rises in crude steel output will negatively affect the finished steel market and urged steelmakers to pay attention to the production situation.
Thirdly, the China Iron Ore Price Index (CIOPI) stood at $104.15/mt as of June 17, up 50.88 percent compared to the beginning of the year and rising by 6.68 percent month on month. As of the same date, the composite steel price index (CSPI) was down 2.0 percent month on month, while up 1.64 percent compared to the beginning of the year. The much quicker rises in import iron ore prices have reduced steelmakers’ profitability.
Fourthly, China exported 5.74 million mt of finished steel in May this year, down 1.14 million mt or 16.6 percent year on year. Due to the escalation of trade friction between the US and China, China’s steelmakers will come under strong pressure as regards maintaining their share in the global market.
The CISA report indicated that finished steel prices in China will fluctuate within a limited range in July.