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Report: Factors affecting steel prices in China from down to up

According to a new report issued by the China Iron and Steel Association (CISA), steel prices in the Chinese domestic market shifted from declines to rises in February following the Chinese New Year holiday.

However, the rises slowed down in March, even indicating some downward corrections also. There are a number of factors that participants in the Chinese finished steel market should pay attention to in March, the CISA stated.

Inventory steel

Inventory levels of finished steel have increased. As of February 28, inventory of the five main finished steel products in 20 cities of China amounted to 16.95 million mt, up 2.16 million mt or 14.6 percent compared to February 20. As of March 10, finished steel inventory in China totaled 17.77 million mt, rising by 0.82 million mt or 4.8 percent compared to February 28.

crude steel production

According to the CISA, the average daily crude steel output in China amounted to 2.3195 million mt in late February (February 21-28), up 0.85 percent compared to mid-February (February 11-20).

Iron Ore Price

China Iron Ore Price Index (CIOPI) stood at $167.33/mt as of March 12, increasing by 88.86 percent year on year, while the composite steel price index (CSPI) rose by 33.54 percent year on year to 132.63 points in the given period. The quicker rises in iron ore prices negatively affected steel enterprises’ profitability.

Demand and Supply

The CISA urged steelmakers to pay attention to the quick rise in steel production as it will exert a negative impact on the balanced situation as regards demand and supply.

Covid-19 and peak season

Meanwhile, China’s steel exports will face uncertainties due to the Covid-19 situation in Europe and the US.
Since demand for steel will improve further in the traditional peak season, steel prices in China are foreseen to move at high levels.

$1 = RMB 6.5098

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