China's steel prices to stay range-bound after Nov rise: CISA

China's steel prices are likely to remain range-bound for the foreseeable future after the rise in November, according to the latest monthly report of the China Iron & Steel Association (CISA), citing the arrival of the off-season for steel consumption with the fall in temperatures.

Most regions in China have entered winter now, and steel demand from the construction and manufacturing sectors may decrease as the days become colder, CISA said. Although steel output has continued to decline, the decrease has fallen short of market expectations, which may aggravate the imbalance between supply and demand, the association noted.

Over the first ten days of December, daily crude steel output among CISA's member steel mills averaged 1.93 million tonnes/day, down 4.2% from that for late November, or lower by 2.8% on year. Based on this data, the association estimated that the country's daily crude steel production reached 2.49 million t/d in early December, slipping by 3.6% from the prior ten days.

Besides, steel inventories at traders' warehouses emptied further, while the volume held by domestic steelmakers has shown signs of accumulating, indicating that Chinese traders were inactive in building up stocks, CISA said. This is putting more pressure on domestic steel prices, it warned.

As of 10 December, 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 regular tracking totalled 7.37 mnt, down 180,000 tonnes or 2.4% compared with late November.

On the other hand, inventories of the five major steel items held by CISA's member mills totalled 14.1 mnt, higher by 1.1 mnt or 8.8% during the same period.

In parallel, the fast growth in prices of steelmaking raw materials may place more pressure on domestic steelmakers from the cost side, as the rise in steel prices has slowed, the release showed. As of 15 December, the prices of domestically-mined iron ore concentrates had increased by 2.8% from the end of November, and those of coking coal and metallurgical coke had jumped by 3% and 4.3% during the same period.

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