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 October, average daily output of crude steel in China amounted to 2.6629 million mt, though down 1.19 percent compared to September, while still the third highest level in history. The high-level output exerts negative pressure on the steel market, especially against the background of slacker demand in winter season.
Secondly, the composite steel price index (CSPI) for the Chinese domestic market has seen consecutive three weeks declines when entering in the month of November. As of November 16, the CSPI has declined to 116.74 points, down 4.03 percent compared to the end of September. However, the China Iron Ore Price Index (CIOPI) as of November 16 has increased to $74.22/mt, up 9.34 percent compared to that by the end of September. The diverse trend between import iron ore prices and finished steel prices indicated steelmakers will bear pressures of rising cost.
Thirdly, in October China’s finished steel export volume totaled 5.5 million mt, down 7.6 percent month on month, continuing its declining trend. Meanwhile, the escalation of trade tensions between the US and China will continue to negatively affect China's exports.
Meanwhile, as of October 31, finished steel inventory in China amounted to 9.81 million mt, down 2.03 percent compared to the end of September, while increasing by 1.87 million mt or 23.5 percent compared to the beginning of this year, and down 0.18 million mt or 1.85 percent compared to the same date last year. The decreases in inventories of finished steel in China indicate market players have mostly held a pessimistic attitude towards prospect for the future market.
The CISA report indicated that finished steel prices in China are likely to move on a fluctuating trend in the coming period.