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2018 Steel Market Forecast, Profile of 45th SteelHome Steel Club Salon

http://en.steelhome.cn [SteelHome] 2017-12-29 09:40:40

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45th SteelHome Steel Club Salon was held in the meeting room of SteelHome on the afternoon of 28 December 2017. The half-day gathering was hosted by SteelHome website. Around 40 club members participated the discussion and shared their understandings of recent market.

Starting the discussion, Mr.Liu Wenlu, Deputy GM with SteelHome, delivered a speech titled Forecast for Q1 2018 China Steel Market. Here is his conclusion:

Production: Production cutbacks beyond expectations; Q1 output to be low.

The move of production cutbacks commencing from 2+26 cities worked. The production cuts in November surpassed the expectations from marketers. The production in the first ten days by CISA member steelmakers continued to fall. SteelHome predicts that December output and Q1 will see low-level production in iron and steel.

Demand: Conflict of construction steel market: supply not demand.

The rise of China’s major economic indicators in the first eleven months slid down, while with falling rate smaller than market’s expectation. China’s cement output in 11 months declined 0.2 percent on year, which reflected the falling demand for construction steel. While, construction steel market saw low inventory and high price.

In 2018, Chinese economic situation will maintain stable with uptrend. Q1 supply in construction steel will be affected by production limitations in heating season and substandard steel closure move.

Export: Chinese domestic price higher than international one; Q1 China’s steel export to remain low.

Two factors determined steel export: domestic supply/demand and international demand. Rebar market price in Shanghai market, even considering 13 percent rebate, was still higher than international market. Flat market, still facing the overcapacity issue, should be adjusted by exporting shipments.

Scrap: Production limitations in winter season worsened iron ore structural supply/demand conflict; scrap consumption close to its upper limits.

The inspection of production limitation of steelmakers during winter season will be based ‘BF production capacity and electricity usage’. The move heated up high-quality iron ore demand.

China-produced crude iron ore output traditional sees a shrinkage in Q1, and the country will add imports. Steelmakers, in order to increase steel production, have charged scrap at their most.

Coke: Coke supply to remain tight.

China’s coke supply will remain tight. Current coke production has fallen to early 2016 level, which will curb steel production. Steelmakers will replenish coke stocks for production ramp-up starting from March 15, 2018, in comparison to coke producers’ incomplete production recovery.

Jan-Feb is traditional season when Chinese coal miners cut production for safety concern, maintenance and Spring Festival etc.. What’s more, Australian cyclone will have an impact on coking coal supply. Then the country will see a tight coking coal supply in Q1.

Capital: China sufficient in capital supply.

Fiscal capital will be supplied and paid by year end. New bank loans in Q1 will be considerably released.

Inventory: Chinese steel market walking into inventory replenishment.

At present, construction steel has been adjusted, which is favorable for buyers to restocks before Spring Festival (Feb.15-22). Q1 steel price in China will climb up entirely. Inventory change after Spring Festival should be greatly paid attention to.

Glance of the Salon


(To contact the reporter on this story: tina.tong@steelhome.cn or 86-21-50585733)
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