China's steel prices to fluctuate in near term - CISA

Chinese steel prices are expected to keep fluctuate in the coming term with uncertain factors in both domestic and overseas markets, according to the latest monthly report of the China Iron & Steel Association (CISA).

There are still many uncertainties in the global market, such as the economic slowdown in Europe and America, rising inflationary pressures and continuing impacts of geopolitical conflicts, the association noted.

The major stress on the domestic steel market comes from weak demand due to the slower-than-expected recovery in downstream steel-consuming industries, especially for the great impact on steel consumption with the persistent weakness in the real estate sector, according to the report.

Meanwhile, prices of steelmaking raw materials declined continuously since May, weakening the support for China's finished steel prices to some extent, CISA pointed out.

As of June 13, the prices of domestically-mined iron ore concentrates and scrap declined by 7.5% and 5.9% respectively on month, while those of coking coal and metallurgical coke dropped more sharply by 18.8% and 16.6% during the same period, the report showed.

Besides, steel inventories held by Chinese mills have accumulated somewhat, also weighing on the domestic steel prices, CISA warned.

By early June, the total inventories of the five major steel products - comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate - held by CISA's member mills had mounted to 15.8 million tonnes, higher by 184,000 tonnes or 1.2% from the end of May.

The association suggested that domestic steel producers should analyse the situations between supply and demand, avoid blindly increasing production, and maintain the stability of the domestic steel market.

In parallel, domestic steelmakers are still under great pressure as the prices of imported iron ore significantly increased this month, CISA said in the report.

However, the association believes that steel demand in China may recover gradually in the coming term given the country's stable macroeconomic environment and more measures promoted by the central government to boost economic growth.

Written by Nancy Zheng, zhengmm@mysteel.com
Edited by Alyssa Ren, rentingting@mysteel.com

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