Chinas steel market is unlikely to gain much momentum in
the fourth quarter, given rising supply and moderate
The country produced
2.14 million tonnes of crude steel per day from Sept.
11-20, up 0.7 percent from the first 10 days of the month,
according to the latest China Iron and Steel Association (Cisa)
data. That amounts to 782 million tonnes on an annualized
"Production could stay
high in the next few months as no major mills have cut back
plans so far. But the pace could slow down, given the recent
downtrend in steel prices, as well as stricter environmental
controls in major steelmaking regions such as Hebei province,"
a northern Chinese mill source said.
To ease air pollution
around Beijing, the countrys largest steelmaking region,
the central government has unveiled plans to slash ironmaking
capacity by 14.47 million tonnes and crude steel capacity by
15.86 million tonnes by the end of 2015.
It set a further
target of cutting 66.72 million tonnes of ironmaking
capacity and 67.26 million tonnes of crude steel capacity by
the end of 2017, according to a provincial conference held
Only a small
percentage of market players contacted by AMM sister
publication Steel First expect a price rally when
business resumes Oct. 8 after the weeklong National Day
holiday. Others are betting on slight fluctuations or more
golden September disappointed me this time. Im not
expecting too much from the silver October," a mill source in
central Chinas Henan province said.
September and October
are usually the peak months for the countrys steel
industry. Market participants had generally expected better
performance when prices trended upward in July and August.
rebar prices in Beijing have lost about 190 yuan ($31) per
tonne since the end of August, down 5 percent.
In Shanghai, domestic
hot-rolled coil prices also declined 3.5 percent over the same
period, according to Steel Firsts price
difficult to make any forecast at the moment, as there are too
many uncertainties in the market," a Shanghai-based analyst
optimistic about demand recovering in the fourth quarter. There
are no incentives that drive demand in sight," a Tangshan-based
mill source said.
While some are
expecting stimulus from the third plenary session of the 18th
Chinese Communist Party Central Committee scheduled for
November, the source in Tangshan is less optimistic about any
big policy changes, arguing that Beijing will likely focus on
economic restructuring to ensure steady growth rather than rely
purely on investment-driven gross domestic product growth.
"Hence, I think steel
demand is not likely to see any significant increase under
these circumstances," he said.
"I think steel prices will likely be rangebound for most of
the fourth quarter. It would be better to keep a moderate
inventory at hand and be cautious when making any decisions," a
Shanghai-based trader said.
A version of this
article was first published in AMM sister publication Steel