CISA: China’s steel demand to accelerate after NCP
“When the NCP is under control, steel demand from downstream users may gradually recover or even accelerate in pace after the short-term curtailment, and new demand may be triggered because of the epidemic,” he said.
Construction, machinery manufacturing and steel exports are the three key aspects to reflect China’s steel demand, among which construction accounts for about 60% of the country’s total steel consumption, and the demand from this sector will “unavoidably decline as for the first quarter, 20% of construction will be affected,” he said.
For the whole 2020, however, it depends on whether the NCP will be under control by March, if not, many construction sites will have to further delay the resumption, and the pace will be slow at the early days of resumption, and the steel demand from the sector may still decline despite that the Chinese government has lined up quite a number of infrastructure projects for 2020, according to him.
Steel demand from China’s manufacturing industry including auto, white goods, shipbuilding and machinery, however, may be able to sustain at the level of 2019, as all the manufacturer, though having been delayed in resumption by the epidemic, will be able to quickly ramp up the capacity utilization rate to make up for the losses in the first quarter.
“The short-term disruption will have limited influence on steel consumption in the manufacturing sector, (and) the total output of manufacturing goods this year will not be less than 2019,” He concluded.
As for steel exports, Chinese steel mills had produced all to fulfil the orders for March before the Chinese New Year (CNY) holiday over January 24-February 2, it remains a question, though, whether all the tonnage will be loaded and shipped on time.
Besides, some countries and regions, out of the concern over the contagion, may be reluctant to order steel products from China, and some buyers may breach the contracts because of steel price slumps, He warned.
“This will probably affect greatly China’s direct steel exports in Q2 and Q3,” he added, though, “it still need time to monitor the market and assess the situation.”
Under the present circumstances, China’s January steel output should remain relatively steady, but steel inventories have been on the rise, adding up to about 20.2 million tonnes for all the five major steel products at the traders as of February 7, and domestic steel prices have been under the pressure, and the rebar futures price has been on the decline since the first trading day on February 3 after the CNY holiday, He noted.
He did not provide any specific number regarding the country’s steel output or demand, and back in December 2019, China’s domestic steel demand for 2020 was estimated at 941.7 million tonnes, or up 14 million tonnes on year, as reported.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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