Steel prices in China may rise in September

Both fundamentals and market sentiment will support steel prices in China in general and rebar in particular in September, while coke and scrap prices may remain on an upward trend, while iron ore prices may fall from highs said Wang Jianhua, chief analyst at Mysteel, his short-term forecast for September 1.

On the price side, steel prices, especially rebar, could have a chance to rise while raw material costs remain high despite declines, support from higher flat steel prices and improved demand, he stressed.

However, steel prices in China as a whole have tended to increase for four consecutive months, which has been a fairly long period even in the context of history, so the market should beware of risks, he added.

China's domestic demand for steel, in particular construction steel, could rise from the previous month this month as demand in Xinjiang could rise by 1 million tonnes as the pandemic is under control, repairs following heavy rains and floods could lead to to more growth. The new construction project will increase the demand for steel by an additional 1.5 million tons.

In addition, the country's engineering industry, a key consumer of steel, will see continued strong orders from both home and overseas as the global manufacturing PMI returned to the expansion zone from July and demand for household electrical appliances surged. also for both domestic sales and export.

Excavator sales in China, including domestic and overseas markets, could reach 20,800 units in August, or 50% more than last year, and some manufacturers have even received orders for their October production, Wang said, adding that the recovery in global trade also led to growth. container steel is in demand.

According to market research by Mysteel, daily trading volume for construction steel, while largely unchanged since July due to a less-expected recovery in demand for the month, is still up 14.6% year-on-year.

Thus, sentiment in the Chinese steel market will be supported by the expectation of a reduction in steel inventories due to increased demand, and the total stocks in China of five main steel products, including long products and rolled products, could be reduced by 2 million tons, according to Wang.

On the domestic steel supply side, the remaining positive but low margins will be enough to maintain manufacturing enthusiasm in Chinese steel mills, but not to push for even higher production, especially when their production costs are higher compared to September in September.