CISA: steel prices in China will fluctuate in the near future

CISA warned that domestic demand for steel will decrease in the coming weeks due to the worsening international situation and slower economic growth in the country.

CISA cites the latest United Nations data released on September 15 that shows global growth could fall to 3.6% in 2022 from 5.3% expected this year, as uneven recovery across regions could slow overall global growth. ...

China's domestic economy is also under pressure amid signs of weakening real estate investment and local bond issues. At the same time, Chinese orders for industrial equipment have been steadily declining, and car production and sales also showed a decline compared to last year, indicating a weaker demand for steel in the domestic market.

China's crude steel production is expected to continue to decline year-on-year in the near future thanks to a series of measures by Beijing to cut steel production for 2021, such as re-checking steelmaking capacity cuts under current constraints among steel producers, as well as restrictions for steel production in China. Energy use in industries is attributed to high emissions and high energy consumption.

During August, average daily crude steel production in China fell for the fourth straight month to 2.69 million tonnes per day, down 4.1% from the month. The total volume in August fell by 13.2% compared to the same period last year to 83.2 million tons, CISA reports citing data from the country's National Bureau of Statistics.

CISA noted that it is expected to establish a new equilibrium between supply and demand with a simultaneous slowdown in growth on both sides, inviting domestic steel companies to analyze market changes and accordingly adjust their product structure to maintain stability in steel prices.

China's steel mills continue to face significant pressure to lower their production costs due to soaring coking coal and coke prices. As of September 10, the coking coal price was RMB 3,740 per tonne ($ 578 per tonne), up 18.4% from the end of August, while the coke price rose 14.4% over the same period to 3,804. yuan per ton. according to the association. Steel prices rose only 1.3% during this period, according to CISA, well below the rise in coking coal and coke prices.