China's steel prices to remain rangebound for now - CISA

Chinese steel prices are expected to stay rangebound in the near term, according to the latest monthly report released by China Iron & Steel Association (CISA), pointing out that the central government's measures to stabilize economic growth should keep domestic steel demand stable. But the complicated international situation will make demand trends overseas uncertain, it warned.

The latest forecast of the World Steel Association (WSA) released on April 18 showed that global steel demand is expected to grow by 2.3% on year to 1.82 billion tonnes in 2023, and that Chinese demand may reach 939 million tonnes, higher by 2% from the prior year.

"Despite the on-year rise, steel demand in both China and the world cannot recover to the level of 2021," the Association noted from the WSA's forecast.

For the domestic market, steel demand from the manufacturing sector is likely to maintain on-year growth, while the demand outlook for the construction industry is less rosy given the property market's persisting weakness, CISA pointed out.

Meanwhile, the decrease in prices of steelmaking raw materials also weakened the support that Chinese finished steel prices enjoy, CISA noted.

For example, as of April 14, the prices of scrap and domestically-mined iron ore concentrates decreased by 1.4% and 1.1% respectively from the end of March, and those of coking coal and metallurgical coke slipped by 4.3% and 4.1% during the same period, according to the CISA release.

In early April, inventories of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate in the 21 Chinese cities under CISA's survey registered 12.18 million tonnes, down 1.1% from the end of March, while the volume held by CISA's member mills had mounted by 6.2% during the same period to 18.32 million tonnes, putting more pressure on domestic steel prices.

The Association suggests that Chinese steel producers take measures to maintain the balance between supply and demand, as domestic steel production has increased rapidly while the growth in demand has been limited, due to the depression in the real estate sector, CISA warned.

During March, China's daily crude steel output averaged 3.09 million tonnes/day, jumping by 8% from that for the first two months, CISA said quoting data from the country's National Bureau of Statistics.

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.