Because of the declining steel price and increasing crude steel inventories, Chinese steel manufactories and traders have less confidence in steel price in the fourth quarter.
Mr. Wu Xichun, a counselor of CISA, indicated that the weak demand and exploding inventories led to a hard time to the whole rebar industry.
Based on the data of National Bureau of Statistics and General Administration of Customs, steel export has witnessed a large decline and import rise greatly over the past eight months, which causes increasing consumable steel. But the total investment of newly-commenced projects of domestic fixed-asset investments constantly falls. The domestic commenced projects investments reached CNY 5110 million in the second quarter, but which was CNY 1110 million in August.
The situation is due to the following reasons.
1. The newly increased investment in June brought about the short supply, but in July the situation reversed as the falling investment.
2. Banks slowing down the pace of credit also had a large influence to the market demand. New RMB loans added CNY 7370 million in the first half of this year, monthly CNY 1220 million. However, the number fell to CNY 355.9 million in July. And if bank credit continues to tighten, steel price will keep decline.
3. Steel manufactories have no plan to reduce the production on weak demand.
According to the analysts of the industry, only the steel price declines close to the cost, manufactories may consider limiting the production, and the future price is still uncertain. They predict that steel price may decline to the bottom in October, and the price may slightly rebound in November.
Overall, the steel price in China will be in low level and the trend is determined by the steel production and inventories in the fourth quarter.