Steel prices in China may be reduced in November

Steel prices in China's domestic market may still rise this month as demand growth may outpace supply growth, Wang Jianhua, chief analyst at Mysteel, shared his short-term market outlook on October 30.

Wang predicts that weekly production of the five major finished steel products could decline further to 10 million tonnes per week in November, given production constraints for the winter and the likely annual maintenance initiated by steel mills after operating at full capacity for much of 2020. According to a study by Mysteel, in October, their weekly production fell by 277,000 tons per week to 10.66 million tons per week.

Domestic stocks of five major steel products, including rebar, wire rod, hot rolled coil, cold rolled coil and sheet, may be down 4 million tonnes this month from the previous month, with stocks in some regions or some products being shipped. "Tightness due to expected growth in demand," Wang added.

Steel consumption in October showed signs of robust growth as China's construction steel trading averaged 242,689 tonnes per day between October 1-27, up 7.7% MoM or 28.4% in on an annualized basis, indicating that demand from infrastructure and real estate construction has continued for months, and Wang expects this to continue in November.

Steel demand from domestic auto makers may continue to rise this month, with the country's auto production expected to reach 2.5 million units. He stressed that online sales and exports of household electrical appliances could also grow, leading to strong demand for flat products.

Auto production in China could accelerate further to realize the projected 4% year-on-year decline for the full year of 2020 as total volume still fell 6.1% year-on-year to 16.5 million units in January-September. according to the latest data. data from the country's National Bureau of Statistics, notes Mysteel Global.

According to him, in macroeconomic terms, new orders and stocks of finished products in the manufacturing industry in China are developing positively, and this dynamics is likely to continue in November. He noted that in the manufacturing industry of the country in September, the growth rate of new orders exceeded production volumes.

According to him, by September, the sub-index of purchases of raw materials by Chinese manufacturers was expanding, while the index of finished goods stocks was decreasing, which indicates that manufacturers are in the stage of passive reduction of stocks due to higher demand�