As indicated by a new report issued by the China Iron and Steel Association (CISA), the declining speed of the steel inventories in the spot market in China have dialed back, while the stock on the steelmakers' side has expanded, flagging that steel costs will go under some strain, however, they are probably not going to demonstrate large decreases and will fluctuate within a limited range.
On December 10 this year, China's domestic stocks of five main finished steel products in 20 major cities totaled 8.27 million tons, down 380,000 tons or 4.4 percent from Nov. 30. As of December 10, the finished steel inventories of large and medium-sized steel enterprises in China added up to 13.3425 million mt, increasing by 858,200 mt or 6.87 percent compared with November 30.
In February 2022, the Winter Olympic Games will be held in Beijing and Zhangjiakou, while in March there will be a significant gathering held in Bejing, thus production restrictions will be very strict this winter, which will reduce crude steel production, which in turn would boost steel prices.
According to the Central Economic Working Conference held recently, China will ensure a stable macroeconomic environment and gradually introduce policies in the near future, which will provide support for the steel industry.
Additionally, as of December 10, the import iron ore prices, domestic production iron ore concentrate prices and scrap prices have risen by 3. 13 percent, 1.25 percent and 1 .92 percent respectively compared to the end of November.
Coking coal and coke costs have kept on declining, while the declining pace has dialed back, which will apply an adverse consequence on steelmakers' productivity.