CISA: Steel prices in China to continue limited fluctuations in November

Wednesday, 23 October 2019 13:38:53 (GMT+3)   |   Shanghai
       

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 decreased in September. As of the end of September, finished steel inventory in China amounted to 13.06 million mt, down 0.46 million mt or 13.56 percent compared to the end of August. However, as of October 11, inventory of finished steel totaled 13.52 million mt, up 3.52 percent compared to the end of September. The increases in finished steel inventory following the week-long holiday exerted a negative impact on the finished steel market.

Secondly, in September, the average daily crude steel output in China amounted to 2.759 million mt, down two percent compared to August, though remaining at comparatively high levels. The CISA urges steelmakers to control output capacity utilization rates, to ensure a stable situation between demand and supply.

Thirdly, the China Iron Ore Price Index (CIOPI) stood at $91.46/mt as of October 12, up 32.54 percent from the beginning of the year, while rising by 31.47 percent year on year. As of the same date, the composite steel price index (CSPI) was down 0.9 percent from the start of the year and down 12.43 percent year on year. The deviation between the import iron ore prices and steel prices has negatively affected steel enterprises’ profitability.

According to the forecast from the World Steel Association (worldsteel) for October, the year-on-year growth in global steel consumption will be 0.7 percentage points lower than October 2018. In particular, Europe, Central and South America, the Middle East and Africa will see year-on-year decreases in consumption growth, while growth in North America and the ASEAN region will slow down. As a result, China’s steel exports in the fourth quarter will face a difficult situation due to trade protectionism.

In this overall context, the CISA has indicated in its report that demand and supply in the Chinese finished steel market will basically remain balanced in the near future due to slacker demand and decreased output, while finished steel prices in China will continue to fluctuate within a limited range in November.


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