Tsingshan has sold full production across all of its Chinese plants through June, indicating that, not only has demand returned, the domestic industry has rebounded.
The steelmaker’s order books are full for all of this month and next, as consumption has returned China and its economy restarts following COVID-19-related lockdowns. Amid improving business sentiment, the company also sold around two-thirds of its July production in China, according to reports.
Beijing has incentivized economic activity, which, in turn, will increase steel consumption. As businesses resume operations, stainless steel demand—led by the automotive, manufacturing, and construction sectors—has improved. As part of the stimulus plans, new infrastructure developments at airports, train stations, and 5G cell phone towers have conveyed confidence and lifted demand.
Additional stimulus announcements are expected at China’s annual parliament session, which was moved to May 21 from March 5. Economic revival measures should encourage traders and consumers to buy before prices increase.
Mill inventory in China dropped by about 20pc from a record 1.68mn mt in February to 1.36mn mt currently. Brokers’ inventories also declined by 25pc since March, indicating elevated trader buying activity.
Approximately half of Tsingshan’s orders are from brokers rather than from consumers, according to reports, compared to 85pc of orders that normally come from end users. This shortage suggests market uncertainty has not completely dissipated, and that the surge in demand may be short lived.
Global demand has not yet returned, which leads the industry to question whether China’s recovery will last, considering export demand for finished and stainless steel remains low.