Finished steel prices in China in April shifted from an uptrend to a downward trend as demand from downstream users was slacker than market players had expected and given the relatively high outputs of steel, as stated by the China Iron and Steel Association (CISA).
In the January-April period this year, the average daily crude steel output of CISA members steel enterprises in China amounted to 2.3294 million mt, up 2.2 percent compared to 2.2783 million mt recorded in the January-March period.
The continuing weak performance of the real estate industry exerted a negative impact on the demand for steel. At the same time, the growth in demand for steel in the manufacturing and infrastructure industries also slowed down. The CISA urged steelmakers to fully analyze the situation of supply and demand and to take active measures to maintain the smooth operation of the steel market.
Average imported iron ore prices increased to $120.5/mt in April, up by $28.4/mt or 30.9 percent compared to December last year, while finished steel prices edged down by 1.85 percent in the given period. The sharp rise in the price of imported iron ore had an obvious negative impact on the profits of steel enterprises. Entering May, raw material prices moved down at a faster declining pace, weakening the support for finished steel.
On May 10 this year, overall domestic inventories of the five main finished steel products in 21 major cities in China totaled 11.30 million mt, down 210,000 mt or 1.8 percent compared to April 30, according to the CISA data, which may ease the downward pressure on steel prices.
It is thought that steel prices in China will likely stop falling and stabilize in May.