The huge economic stimulus package announced by the China’s central government that it will take times for China"s steel market to see a substantial recovery since it is still dragged by the current heavy stock and weak demand in winter.
Chinese central government"s CNY 4 trillion economic stimulus package has undoubtedly helped resume steel traders" confidence, but the policy effect is lagged.
According to Langesteel"s survey, China"s steel market, run steadily this week with no signals for more demand. An expert with Langesteel said that steel plants and their downstream industries held heavy stock. One example is real estate industry, which demands 25% of the total steel output, had reported a CNY 112.51 billion increase in the stock of steel products by October.
The major real estate developers in China like Vanke and Poly Real Estate Group have to spend 22 months and 36 months, respectively, to digest their inventories. A considerable number of listed steel enterprises reported a ratio of inventory to gross assets as high as more than 30%. The ratio of Pangang Group Sichuan Changcheng Special Steel hit 56% and Nanjing Iron & Steel and Guangzhou Iron & Steel exceeds 40%, respectively.