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:
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
Demand: Conflict of
construction steel market: supply not
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.
domestic price higher than international one; Q1 China’s steel export to
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.
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
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.
sufficient in capital supply.
Fiscal capital will be
supplied and paid by year end. New bank loans in Q1 will be considerably
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
of the Salon