Steel prices in China are expected to stay
range-bound for the foreseeable future due to the weakness of both supply and
demand, according to the latest monthly report of the China Iron & Steel
Association (CISA).
The domestic steel
market is in the traditional off season for steel consumption in winter.
Meanwhile, with the Chinese New Year (CNY) holiday in early February less than
two weeks away, steel demand from many users including construction firms and
manufacturing industries may weaken further, the association noted.
As for steel supply,
production among domestic mills remains at a relatively low level, while the
tonnage has recovered somewhat this month. Over 1-10 January, daily crude steel
output among CISA's member steel mills averaged 2.02 million tonnes/day,
increasing by 21.2% compared with that for late December, the association's
data showed.
Steel inventories held
by Chinese steel mills and traders have shown signs of accumulating, which may
put pressure on domestic steel prices in the coming term, CISA warned.
As of 10 January,
total inventories of the five major steel products comprising rebar, wire rod,
hot-rolled coil, cold-rolled coil and medium plate held by CISA's member mills
were at 14.4 million tonnes, up 2.04 million tonnes or 16.5% from the end of
December.
During the same
period, total inventories of the five steel items in the 21 Chinese cities
under CISA's regular tracking increased by 520,000 tonnes or 7.1% to reach 7.8
million tonnes, the report showed.
China's prices of
major steelmaking raw materials have decreased somewhat this month except for
the slight rise in prices of iron ore, which eased the market pressure from the
cost side to some extent, CISA noted.
As of 12 January, the
prices of coking coal and metallurgical coke had fallen by 4.2% and 7.6%
respectively from the end of last year, though the average price of
domestically-mined iron ore concentrates had increased by 2.3% during the same
period, according to the report.
However, the
association suggested that more attention needs to be paid to possible extreme
weather events in coming weeks, which may result in a rise in prices of coal
and coke if the consumption of coal and electricity increases substantially.
Steel mint