CISA: China steel industry stabilizing in Q1, challenges stay

As China's economy has made a good start in the first quarter of 2023, the overall domestic demand for steel from downstream sectors showed signs of stabilizing, stated Tang Zujun, vice chairman of the China Iron and Steel Association (CISA) at a recent press conference, noting that the country's steel output and apparent crude steel consumption both posted on-year growth over January-March. But he also listed out some "difficulties and challenges" that confront the steel sector at the conference.

In the first quarter, "the growth in steel output was higher than that of demand", with China's crude steel production totaling 261.6 million tonnes over January-March, up 6.1% on year, while its apparent consumption of crude steel during the same period rising only 1.9% to 243.4 million tonnes, according to Tang.

Also, Chinese steel industry saw its profits fall sharply during Q1, as CISA's member mills posted a 71.5% plunge on year in their combined profits to Yuan 16 billion ($2.3 billion). In contrast, their accounts receivable grew 16.7% on year to Yuan 173.9 billion by the end of March, the vice chairman added.

"Chinese steelmakers are facing severe challenges in their production and business operations as domestic steel prices have declined continuously and sharply recently, while raw materials prices still persisted at high levels despite moderate slides," he pointed out.

For example, the country's national price of HRB400E 20mm dia rebar was assessed by Mysteel at Yuan 3,888/tonne including the 13% VAT on April 27, or plummeting by Yuan 373/t on month. For iron ore prices, Mysteel SEADEX 62% Australian Fines dropped $14.95/dmt on month to settle at $106.7/dmt CFR Qingdao as of the same day.

"Stability is the foundation for the high-quality development of the steel sector, and the key to secure such stability is to maintain a dynamic balance between market supply and demand," CISA stated.

CISA again called on Chinese steel mills to strengthen self-discipline and keep an eye on the overall demand and structural changes of the downstream sectors. "They should set the pace of their production rationally and manage steel inventories in a reasonable manner," the association suggested.

Written by Rong Zhang, zhangronga@mysteel.com
Edited by Alyssa Ren, rentingting@mysteel.com

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