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, in November, though the average daily output of crude steel in China has seen slight decreases compared to October, while still at comparatively high level. The high-level output exerts negative pressure on the steel market, especially against the background of slacker demand in the winter season.
Secondly, as of the end of the second week of December (December 14), the composite steel price index (CSPI) for the Chinese domestic market has been at 106.78 points, down 1.39 percent compared to the previous week. However, the China Iron Ore Price Index (CIOPI) as of December 14 has increased to $67.29/mt, up 1.33 percent compared to that as of December 7. The diverse trend between import iron ore prices and finished steel prices will squeeze steelmakers’ profitability.
Thirdly, in November China’s finished steel export volume totaled 5.3 million mt, down 3.7 percent month on month and 0.9 percent year on year, maintaining its downtrend. Meanwhile, the trade tensions between the US and China will continue to negatively affect China's exports.
Meanwhile, as of November 30, finished steel inventory in China amounted to 9.69 million mt, down to the lowest level in 2018. The low inventory level indicated market participants’ slack expectation for the future market.
The CISA report indicated that finished steel prices in China are likely to move on a fluctuating trend within a limited range in the coming period.