The China Iron and Steel Association (CISA) lately held a meeting in Liaoning Province with the steelmaker Anshan Iron and Steel Group, at which it forecast that demand for steel in the second and third quarters this year is unlikely to improve significantly, and so it urged steelmakers to reduce production outputs of their own accord, to maintain the smooth operation of the steel market.
A lot of steelmakers are heard to have reduced their outputs in late April amid the prevailing bearish sentiments among market players, with output reductions of up to 50 percent in Tangshan. Since the beginning of April, coking coal and coke prices have decreased significantly, while import iron ore prices have fallen to their lowest level in four months levels, which weakens the support for finished steel prices from the cost side.
The decreasing demand and declining raw material prices have forced steelmakers to reduce their local prices. Market insiders are waiting to see if import iron ore prices can move down again in May, and, if they do, steel prices may continue their downtrend in the coming month. However, if not, a stabilization of prices may be expected. Steelmakers’ output reductions will likely provide support for steel prices from the supply side.
On April 27-28, several listed Chinese steelmakers issued their financial reports for the first three months this year, showing net losses for the given period. Market insiders said China’s steel industry is again characterized by overcapacity and consider that production reductions could help put the industry back on track again.
