CISA: China's steel prices to be range-bound in near term

Chinese steel prices may stay range-bound in the coming term with the expected supply-demand balance, as steel demand may further recover with serial measures to stabilize the national economy taking effect, the latest monthly report of China Iron & Steel Association (CISA) suggests.

On the supply side, China's steel production decreased slightly in mid-October, with daily crude steel output among CISA's member mills averaging 2.06 million tonnes/day for the month's middle 10 days, down 2.03% from the prior 10 days.

Based on the survey result, CISA estimated that China's daily crude steel output nationwide would ease by 1.2% to average 2.79 million t/d in mid-October.

However, China's steel market may still face certain pressure in the coming term, as the equilibrium between supply and demand is fragile, the association warned.

As of October 20, inventories of five key steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by CISA's member mills mounted further to 17.72 million tonnes, higher by 8.6% from 10 days earlier.

And during the same period, the volume of these five major steel products in 21 Chinese cities under CISA's survey emptied to 8.62 million tonnes, down 4.5% compared with that on October 10.

Although finished steel stocks at Chinese traders' warehouses returned to the downtrend in mid-October, the decrease was rather small. Accordingly, CISA urged domestic steelmakers to keep a tight rein on production so as to maintain the stability of the market.

On the other hand, the association also noted that higher prices of key steelmaking raw materials such as coal, coke and ferrous scrap had put more pressure on Chinese mills to reduce production costs in the wake of weakened finished steel prices.

Written by Nancy Zheng, zhengmm@mysteel.com

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