According to a new report issued by the China Iron and Steel Association, steel prices could come under pressure in the coming months but the decline is not expected to be significant. Growth in China, the world’s second-largest economy, has been slowing for two quarters amid concerns about a deflating property bubble and Evergrande’s debt crisis. The property downturn is projected to continue through 2022. This is not good news for steel producers. China’s steel demand is expected to fall 0.7% to 947 million tons in 2022, following a 4.7% decline in 2021, dragged down by weakening property sector and COVID-19 uncertainties.
After a steep correction in December, domestic steel companies have rolled over prices in January and believe that the market may have bottomed out. According to data from Steel Mint, trade prices for hot rolled coil (HRC) – a benchmark for flat steel – stood at Rs 67,500 a tonne at the beginning of December and at Rs 63,100 at the end of the month.
According to Fast markets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $128.03 a tonne during morning trading, up 0.3% compared to Thursday’s closing, the highest since October 12. The iron ore price has risen on expectations of a recovery in Chinese demand after the Beijing 2022 Olympics next month. Top steel producer China is expected to maintain output restrictions to ensure clean air during the Games. However, domestic iron ore producer NMDC has recently cut iron ore prices.
Crude prices rose this week to USD 82/barrel due to supply disruptions in Kazakhstan and Libya. Protests began in Kazakhstan’s oil-rich western regions after state price caps on butane and propane were removed on New Year’s Day. Production at Kazakhstan’s top oilfield Tengiz was reduced on Thursday, its operator Chevron Corp said, as some contractors disrupted train lines in support of protests taking place across the central Asian country. Production in Libya has dropped to 729,000 barrels per day from a high of 1.3 million bpd last year, partly due to pipeline maintenance work.