China’s steel prices are expected to continue trending upward, underpinned by positive market expectations on the recovering downstream demand and decreased steel output resulting from the restrained raw material supply, MySteel Research and consulting said in its latest weekly report.
China’s top policymakers vowed to “provide stronger support to the real economy,” and more monetary easing policies for the property market are expected. Iron ore prices may fluctuate at a high level when the steel-making profits are hovering around the breakeven point, under the backdrop of increasing imports and steel production recovery though steelmakers are not keen to replenish the feedstock, the report said.
MySteel said met coal prices may continue to increase upon tight supply and recovering downstream demand. Hence, China’s spot coke prices are also expected to rise, mainly underpinned by the coking coal prices.
“Steel scrap prices may strengthen, mainly underpinned by its cost competitiveness over hot metal, though EAF steel mills cut production because of negative production profits. The inventory and the utilization rate of 61 EAF steel mills surveyed by Mysteel may continue dropping,” the report said.
China’s steel prices strengthened in the past week mainly driven by the recovering demand amid interrupted steel output by the virus-related restrictions imposed. In addition, the State Council meeting held on March 30 reiterated the insistence on the full-year growth target and stepping up policy support to stabilize the economy, the report said.
Iron ore prices picked up, bolstered by strong expectations of steel-making resumption after the Covid-19 resurgence’s impact on the steel production hub is well contained, it added.
Met coal prices remained stable despite the interrupted imports from Mongolia, the US, and Canada. The slowing down of domestic coking coal production could not ease the supply shortage. China’s spot coke prices also stayed firm upon balanced market fundamentals, mainly underpinned by coking coal prices. Despite the lifting of pandemic prevention measures, steel scrap prices trended upward against the slow deliveries from the recycling process and bullish futures market, the report pointed out.