According to a report released by the China Iron and Steel Association on Monday, the domestic steel market is showing signs of stabilization as production levels have dropped, easing the oversupply issue. This has brought steel prices close to their floor, with expectations of limited fluctuations in the near future.
The association noted that while demand in the steel sector improved during the second quarter, it did not meet initial projections. Despite this, the high level of steel output has led to a growing imbalance between supply and demand.
By the end of May, the prices of eight key steel products monitored by the association continued to fall, with the decline accelerating. The China Steel Price Index (CSPI) fell to 101.83 points at the end of the month, a drop of 3.92 points from April, representing a 3.71% decrease compared to the previous month. This marked an increase of 2.5 percentage points in the decline from the prior month.
In the second week of June, the index dipped below 100 points for the first time in over a year, reaching its lowest level since June 2009.
The association warned that with steel production still remaining elevated, the oversupply issue is likely to persist in the coming months. Additionally, rising trade tensions are expected to make Chinese steel exports more challenging, while iron ore prices may continue to decline. As a result, steel prices are expected to remain volatile but within a narrow range.
On Monday, the rebar futures on the Shanghai Futures Exchange closed up nearly 2%. Analysts attributed the slight rise in spot prices to a weekend increase in Tangshan billet prices. However, they cautioned that the rebound may not last long, as demand remains weak and the quality of available steel is not strong enough to sustain the upward trend.
With these factors in play, the steel market is entering a period of cautious optimism, where price movements are expected to be minimal unless there is a significant shift in either supply or demand dynamics.New Product Fan,Industry Discharge Fan,Freezer Refrigerator Fan,Crown Freezer Refrigerator Fan
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