According to a new report issued by the China Iron and Steel Association (CISA),there are three elements to which participants in the finished steel market should pay attention in the coming period.
First of all, since production cuts in winter season are being implemented, finished steel output will decrease in the coming period, which will exert a positive impact on finished steel prices.
Secondly, upward movement has been observed in import iron ore prices, which will negatively affect steelmakers' efforts to lower costs. According to the CISA, as of November 17, the CIOPI import iron ore price was at $60.72/mt, up 4.31 percent compared to the price at the end of October.
Thirdly, in October, China’s finished steel exports only amounted to 4.98 million mt, down 35.3 percent year on year, constituting the lowest monthly volume since February 2014. Since the Chinese domestic finished steel market has performed well, it will continue to be difficult to export finished steel.
Production cuts in the winter season in China will lower finished steel output, while demand for finished steel will also slacken due to the colder weather, which will result in a balanced situation between supply and demand in the Chinese finished steel market. It is expected that finished steel prices in China will fluctuate within a limited range in the coming period.