China’s steel market could face demand-supply imbalance and pressure steel prices for the next few months, according to China Metallurgical News.
On the sidelines of the Iron and Steel Association meeting, Chairman of the Shangang Group and General Manager of Shaanxi Iron and Steel Group pointed out that the government has rapidly released steel capacity in the past two years which could spoil the equilibrium.
These major steelmakers believe the government policies showed good results in 2018 when there was a balance between demand and supply. But subsequently, the rapidly released capacity has threatened this balance. These steel association members also state that some mills have kept their replacement capacity projects incomplete, which is affecting the development of the industry.
In June, China’s daily crude steel production crossed 3mn mt reaching a record high of 3.05mn. In H1 2020, total crude steel output was 49.01mn mt, accounting for over 57pc of the global output.
On the supply side, however, with the country shifting to high-quality specialty products, consumption per unit of gross domestic product could dip, state experts. A drop in exports could also add to the problem of excess. Between 2015-2019, trades in the seaborne markets have fallen by an average 13pc annual rate. The year 2020 has also been marked by the COVID-19 pandemic and persisting trade tensions which could exacerbate the situation.