Chinese steel sector remains quite buoyant

After about a month when Chinese steel market reopened after New Year Holiday, it has become clear that Chinese steel sector is quite buoyant primarily due to Chinese government’s COVID19 stimuli measures in March-April 2020 to boost economy for supporting Chinese government’s pledge to keep people prosperous & retaining control, when China GDP plunged to minus 6.8% YoY in January-March 2020 quarter from 5.8% in October-December 2019 quarter.

The measures, much more effective than anticipated, supported the economic recovery in subsequent quarters of 2019, Q2 3.9%, Q3 4.9% & Q4 6.5%.

As a result, steel demand in China surged and despite record production of 1055 million tonnes of crude steel in 2020. Chinese domestic steel prices surged by 40-45% from low levels seen in April-June 2020.

Chinese buyers also resorted to import of large volumes of semis & HR, providing support to steel prices in other countries  and boosting billet, rebar & HR export FOB prices (USD 565, USD 660, USD 760) at Black Sea by 80-110% so far
The steel demand recovery in US and EU has created unprecedented steel shortages propelling domestic prices to record high levels. HR is reported to be about USD 1300 per short ton ie about USD 1430 per tonne.

Recent indications suggest that a major European steel maker has hiked HR price to EUR 750 per tonne EXW in South Europe, almost USD 900 per tonne. European steel mills are struggling to service orders, having months of delivery delay.

Meanwhile, Chinese steel mills are also raising their export prices regularly, with HR price climbing to USD 730 per tonne FOB now.

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