China: Steel consumption from manufacturing sector to remain stable

Consumption of steel in China's manufacturing sector is likely to stay stable in July, mainly as some sectors such as while goods and automobile manufacturing are expected to perform better, according to Mysteel's monthly report released on Wednesday.

Steel consumption among home appliance manufacturers is expected to keep firm, and many makers have signalled their intention to keep output high in July to fulfil the demand of end-users, the report said.

White goods sales performed well in June thanks to online and offline promotions in the middle of the year. Supportive policies of local governments such as 'old-for-new' sales campaigns and promoting 'green' and smart home appliances in rural areas may lend some support to demand for household items in the coming term, with temperatures soaring in most regions of China.

Steel usage in the auto sector may increase in July, as auto sales should continue to benefit from supportive government policies such as promoting purchases of new-energy vehicles (NEVs), according to the report.

On June 21, the Ministry of Finance, the State Taxation Administration and the Ministry of Industry and Information Technology (MIIT) released a statement that China will continue to waive purchase taxes on NEVs for another four years until the end of 2027 - a measure seen as boosting auto consumption in the coming term and benefit the development of the country's auto industry.

Earlier this month, MIIT, the National Development and Reform Commission, Ministry of Commerce, Ministry of Agriculture and Rural Affairs and National Energy Administration together announced the launch of a nationwide NEV promotional campaign in rural areas over June-December, as Mysteel reported.

As for the steel structure industry, this is expected to gain some support from government stimulus policies targeting the infrastructure and property sectors. Market sentiment has seen some improvement with the recovery in steel prices, though for now, end-users still prefer to purchase some products to fulfil their immediate needs rather than building up stocks, the report showed.

However, steel consumption from the construction machinery industry may shrink somewhat in the coming month, as weak demand in both the domestic and overseas markets may persuade many machinery manufacturers to lower their stocks of input materials to reduce their risks, Mysteel predicted in the report.

Written by Nancy Zheng, zhengmm@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.