An employee works at a plant of Anshan Zizhu Sci & Tech Profile Steel Co., Ltd. In Anshan, northeast China's Liaoning Province, April 15, 2020. (Xinhua/Yao Jianfeng)
BEIJING, June 9 (Xinhua) -- Steel prices in China are expected to continue a downtrend or be stable in the coming days, reversing the previously sharp uptrend, due to the eased supply-demand relations, the Xinhua-run Shanghai Securities News reported on Wednesday.
"As of June 8, the national average spot price of grade-3 rebar stood at 5,098 yuan/metric ton (tonne), a decrease of 1,131 yuan/tonne from the historical high. Similarly, the average spot price of hot-rolled coils had been 5,470 yuan/tonne, down 1,195 yuan/tonnet from the highest level in history," said Ma Li, chief analyst of lgmi.com, a steel information provider in China.
Ma added that the domestic steel mills previously could have profits of more than 1,000 yuan/tonne and some could even earn profits of nearly 2,000 yuan/tonne in terms of the production of hot-rolled coils. However, the recent decline in steel prices have made some steel mills yield profits of only 100-500 yuan/tonne.
It seems that the tight supply-demand balance in the domestic steel market has passed. In the first five months of the year alone, the domestic steel output increased by 60 million tonnes, equivalent to the increase in the whole year of last year, according to Han Weidong, vice president of Youfa Steel Pipe Group.
In addition, the current steel production capacity basically meet the requirements for advanced capacity and will not be capped, leading to abundant supplies, Han added.
Data from many institutions showed that the recent overall steel inventory has reached a relatively high level in the past five years. As of the end of May, the construction steel inventory was about 300,000 tonnes, higher than that in the same period last year.
From the demand side, the period from June to August usually is the low season of steel consumption. The wheat harvest and rainy season in south China and the scorching weather in north China will dent demand for steel purchases, said Ge Xin, an analyst of Lange Steel Information Research Center. (Edited by Hu Pingchao with Xinhua Silk Road, firstname.lastname@example.org)