Chinese steel prices to stay range-bound for now - CISA

Chinese steel prices are expected to remain range-bound in the coming term as demand from end-users may be weaker than market watchers expect, according to the latest monthly report of the China Iron & Steel Association (CISA) released on March 22.

China has entered the traditional peak season for steel consumption, and domestic steel demand may recover gradually with the central government's series of measures to boost domestic consumption and stabilize economic growth, CISA pointed out.

As of March 10, total stocks of the five steel major products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate in the 21 Chinese cities surveyed by the CISA had reversed down 1% from late February to 14.53 million tonnes - also lower by 20.5% on year - indicating that demand from end-users has already started to kick in.

During the same period, the volumes held by CISA's member mills also grew at a slower pace of 3.6% from late February to 16.68 million tonnes, lower by 6.7% from the same period last year, the report showed.

Domestic steel supply and demand may stay balanced overall as steel output may recover gradually with the 'Two Sessions' political meetings wrapping up two weeks ago and the end of the production curbs imposed for the 'winter heating season', according to the release.

However, steel demand from steel-consuming industries is likely to be lower than market expectations, due to the severe impact of the battle local authorities are waging against the COVID-19 resurgence in many regions, the association warned.

Besides, the conflict between Russia and Ukraine has destabilized industrial activity and supply chains worldwide, driving up the prices of commodities. For the time being, prices of major steelmaking raw materials such as imported iron ore and coke are seen hovering high, increasing the pressures on domestic steel mills in terms of cost reduction.

CISA suggested that domestic steelmakers pay more attention to market changes and adjust their production pace accordingly, to guarantee supply and maintain steel-price stability.

Written by Nancy Zheng, zhengmm@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.