CISA expects steel price to level off in near future
It is reported that steel mills have slowed production alongside the softening demand. During January to September, Chinese GDP growth posts at 9.9%, with 27% rise in fixed assets investment growth. Meanwhile, domestic steel supply tonnages also fall below that of the same period last year, suggesting a healthy market fundamental, and placing a solid floor for future steel prices' leveling off and rebounding.
Figures released by CISA recently show that during January to September,
Domestic steel prices continue slumping resulted from the market panic since the
CISA explained that weakening demand from the slower economic growth at home and abroad is the root cause behind the price slump. Major steel-consuming sectors, esp. the housing market, all witness contracting growth due to the liquidity strains and export setback, putting a drag on steel demand. In addition, the diving prices for steelmaking ingredients, global spot ore and freight rates also undermine steel prices.
Figures disclose that price for domestic ore concentrate, pig iron, and billet, scrap steel and coke all posts 6% to 22% monthly decline in September. Spot ore import price and ocean-shipping freight rates also eye notable decrease. Indian spot ore price plunged 24.24% for a single-month as opposed to the 40% to 51% dive the most for freight rates. Both prices continue big slump in October.
CISA said steel price trend in 4Q mainly hinges on market demand, and more on market confidence. Central government has made major policy changes on monetary, financing and export front and those supportive ones for medium-and-mini enterprises. As a result, market confidence will come back with the implementation of these policies, placing a solid floor for reviving steel demand.
Meanwhile, CISA also noted that market consciousnesses of self-discipline and initiatives have been strengthened at the moment. Many mills have adjusted their capacity and product mix, and curtailed production in the market downturn. The moderated steel output growth and the steel mills' increased ability in regulating resources supply will help improve the market balance, and tip in favor in stabilizing steel prices.
Statistics show rebar stocks in Chinese major markets register at 2.46m tons by the end of Sep, down 102,100 tonnes from the previous month. Stocks for wire rod and flats also stay at normal level with slight increases, helping firm up market prices in the future.