Chinese Steel Demand Expected to Increase in Q2 CY'20 - CISA

According to China Iron and Steel Association (CISA), the steel demand in China would increase significantly in the second quarter of CY'20. However in Q1 CY20, industry faced problems like dull demand, high inventories, falling steel prices and significant decline in profits.

In the first quarter, China's crude steel production remained stable with about 234.45 MnT, increased 1.2% Y-o-Y, with the daily average production of 2.5 MnT, a year-on-year increase of 0.09%, as per the data released by National Bureau of Statistics. In March, the national crude steel output was 78.98 MnT, down 1.7% Y-o-Y with a daily average output of 2.5 MnT, down 1.6% Y-o-Y.

In the first quarter, China exported 14.29 MnT of steel products, a year-on-year decrease of 16% and imported 3.18 MnT, a year-on-year increase of 9.7%. In March, China exported 6.48 MnT of steel, up 2.4% year on year; imported 1.14 MnT of steel, up 26.5% year on year.

Inventory slowly fell back after a sharp rise. In the first quarter, steel stocks rose sharply. As of the first ten days of March, the steel mill inventory monitored by CISA was 21.41 MnT, and the social inventory of five category of steel in 20 cities was 20.21 MnT, both exceeding the historical peak. After the middle of March, with the release of downstream demand and smooth logistics, both the steel mill and social inventories decreased on a ten days tracking basis.

The profit level have declined significantly. In the first quarter, the sales revenue of key member enterprises under the association was RMB 891.6 billion, down 5.6% year-on-year; the total profit was RMB 18.3 billion, down 50.8% year-on-year; the sales profit margin was 2.05%, down 1.89% year-on-year. Specifically, the profit in March was RMB 5.8 billion, an increase on a month on month basis