China's steel prices to keep fluctuating in near term - CISA

China's steel prices are expected to fluctuate further during the foreseeable future, as reversing the imbalance between supply and demand will be difficult to achieve in the short term, according to the latest monthly report of the China Iron & Steel Association (CISA).

At the same time, many uncertainties about the recovery of the global economy remain, given the impact of geopolitical conflicts between Russia and Ukraine, and Israel and the Palestinians, the association pointed out.

As for the domestic market, the recovery in steel-consuming industries has failed to meet market expectations, and the relentless decline in the country's property sector has also dragged down steel consumption, according to the report.

During the first three quarters of this year, China's crude steel output increased by 1.7% on year, while the country's apparent consumption of crude steel decreased by 1.5% from the same period last year, indicating the intensified imbalance between supply and demand, CISA noted.

In parallel, steel inventories held by domestic steel mills and traders accumulated in October, which also placed more pressure on the domestic steel market, the association warned.

As of October 10, 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 totalled 16.4 million tonnes, up 1.1 million tonnes or 7.3% from the end of September. During the same period, stocks of the five steel items in the 21 Chinese cities under CISA's regular tracking had also increased by 3.1% to 9.24 million tonnes.

Chinese steel producers also face great pressure trying to reduce their production costs, as prices of imported iron ore remain at a high level while finished steel prices stay weak, CISA said in the report.

During August, the average price of imported iron ore registered $106.8/tonne, higher by 15.9% compared with that last December, while domestic steel prices during the same period fell by 4.3%, the release showed.

Written by Nancy Zheng, zhengmm@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com

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