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 declined in March. As of the end of the March, finished steel inventory in China amounted to 19.74 million mt, down 2.58 million mt or 11.58 percent compared to the end of February. In April, inventories of finished steel have continued to decrease. As of April 19, finished steel inventories in China amounted to 16.37 million mt, down 3.36 million mt or 17.05 percent compared to the end of March. The decreases in finished steel inventories are expected to exert a positive impact on finished steel prices in the coming period.
Secondly, in the January-March period of the current year, crude steel output in China totaled 195 million mt, up 9.9 percent year on year. The CISA considers that the significant rise in crude steel output will negatively affect the finished steel market and urges steelmakers to pay attention to output volumes.
Thirdly, the the China Iron Ore Price Index (CIOPI) stood at $90.85/mt as of April 19, up 31.61 percent from the start of the year and indicating an increase of 36.6 percent year on year. The bigger rises in import iron ore prices have negatively impacted Chinese steelmakers’ profitability.
Fourthly, China’s finished steel exports indicated a 12.6 percent year-on-year rise in the first quarter of this year, while the average export prices of finished steel stood at $792.8/mt, down $76.63/mt or 8.81 percent year on year. China will continue to face a tough situation with regard to exports in the coming period.
The CISA report indicated that finished steel prices in China are not expected to indicate big increases in the coming period, but will likely continue to fluctuate within a limited range.