Steel prices in China generally showed an upward trend for four consecutive months. Both fundamentals and market sentiment will support steel prices in China in general and rebar in particular in September, while coke and scrap prices may remain on an upward trend, while iron ore prices may fall from highs said Wang Jianhua, chief analyst at Mysteel, his short-term forecast for September 1.
On the price side, steel prices, especially rebar, could have a chance to rise while raw material costs remain high despite declines, support from higher flat steel prices and improved demand, he stressed.
However, steel prices in China as a whole have tended to rise for four consecutive months, which has been a fairly long period even in the context of history, so the market should beware of risks, he added.
China’s domestic demand for steel, in particular construction steel, could rise this month from the previous month as demand in Xinjiang could rise by 1 million tonnes as the pandemic is under control, repairs following heavy rains and floods could lead to to 1 more According to him, the new construction project will increase the demand for steel by another 1.5 million tons.
In addition, the country’s engineering industry, a key consumer of steel, will see continued strong orders from both home and overseas as the global manufacturing PMI returned to the expansion zone from July and demand for household electrical appliances surged. also for both domestic sales and export.
Excavator sales in China, including domestic and overseas markets, could reach 20,800 units in August, or 50% more than last year, and some manufacturers have even received orders for their October production, Wang said, adding that the recovery in global trade also led to growth. container steel is in demand.
According to market research by Mysteel, daily trading volume for construction steel, while largely unchanged since July due to a less-expected recovery in demand for the month, is still up 14.6% year-on-year.
Thus, sentiment in the Chinese steel market is likely to be supported by expectations of a reduction in steel stocks due to increased demand, and the total stocks in China of five main steel products, including long products and rolled products, could be reduced by 2 million tons, according to Wang. …
In terms of domestic steel supply, the remaining positive but low margins will be enough to maintain production enthusiasm in Chinese steel mills, but not to strive for even higher production, especially when their production costs are higher compared to September in September due to price for iron ore, “bursts in August,” he said.
In addition, China’s efforts to tackle pollution in some of the major steelmaking regions, including Tangshan in Hebei Province, Linfen in Shanxi Province in northern China and Anyang in Henan Province in central China, will see some cuts in local steel production this month, Wang noted. .