Jaway Stainless Steel

China steel output keeps increasing trend all the way

As per statistics, China daily output of crude steel came at 1.998 million tonnes up by 2.8% hitting a historical new record high and the averaged volume in the H1 year stood at 1.94 million tonnes. Along with the close of rainy weather a large quantity of affordable house projects would start construction soon so the construction steel prices may further go up in the future days.

Nevertheless, the steel inventory was also on the wane. The data showed that the rebar social inventory was coming at 5.32 million tonnes in the third week of July declining by 135,820 tonnes from one week before, or down by 2.49% that of wire rod at 1.19 million tonnes down by 41,390 tonnes WoW or down 3.368%.

The analysts pointed out that the huge supplies didn’t cause price rise and inventory increase which indicated that the terminal demand for construction steel products was very flourish with good market supply & demand tie.

In July, China manufacturing products inventory index continued high level operation of 51%, slightly edging up by 1% from last month, mainly caused by the seasonal elements. Before this, the index only recorded at 46.4% in February which pushed steel enterprises to speed up production paces and replenish inventory. At present, the whole inventory level was also on the wane boosted by so many construction projects in the second half year.

As per the national economic report in H1 the industrial added value eyed a YoY growth of 15.1% in June retreating by 1.8%MoM the first recovery since three months ago. And the FAI slew down its growing paces in Jun this year, maintaining downward trend since Apr this year.

The steel market kept an upward trend this year and why the new added market resources didn’t bring huge pressure, the regional reason is that China has arranged large quantity of steel exports this year which effectively eased domestic steel market. Meanwhile, the report noted that steel industry should carry out backward capacity elimination works, together with energy saving and emission reduction with a bid to wash out inefficient output capacities as soon as possible.

Besides, many uncertainties still remained in global economic situation, which may influence the export demand in the coming H2. It’s not wise for the steel enterprises to blindly enlarge their production. In June the industrial sales & production rate came at 97.6% shrinking by 0.5% from May.

To sum up, the economic rebound in the second half year would be possibly delayed in Q4. And the industrial add value may bottom out mainly boosted by the real market demand growth after this round of inflation.