China's economy regained some
momentum in the third quarter (July-September, 2022), growing by 3.9% y-o-y, as
per the much-awaited data unveiled by the National Bureau of Statistics
recently. It is a comeback from the negligible 0.4% y-o-y growth seen in Q2.
·
Crude steel output drops in
Jan-Sep - Crude
steel output over January-September touched 780.83 million tonnes (mnt), a
y-o-y drop of 3.4%. However, the September 2022 production was up 17.60% y-o-y
to 86.95 mnt while the national average daily output in September was 2.898
mnt, a m-o-m rise of 7.13%.
·
Steel exports down - China's
finished steel exports totalled 51.21 mnt over January-September, down 3.4%
y-o-y as the world grapples with sluggish steel demand. Finished steel imports
dropped 22.1% y-o-y to 8.34 mnt during the same period.
·
Jan-Sep sees drop in iron ore
imports - Imported
iron ore in September 2022 was at 99.71 mnt, up 4.3% y-o-y. Over
January-September, 2022, iron ore imports totalled 822.542 mnt, dipping 2.3%
y-o-y amid widespread Covid, demand drop and production cuts.
·
Coal imports down in Jan-Sep - China's
coal and lignite imports in September 2022 were at 33.048 mnt, up a marginal
0.5% y-o-y. From January to September, coal imports were at 200.92 mnt, down
12.7% y-o-y amid rise in domestic production for ensuring winter heating.
Steel
market fluctuates
The Chinese steel market has been
showing marginal fluctuations. Last week, the market was down slightly. Most of
the finished products, including hot rolled coils (HRCs) and medium and heavy
plates, fell by RMB 30-100/t compared to the previous week.
Individual markets such as
Shanghai, Hangzhou, Sichuan and Chongqing rebounded slightly, while the HRC
price fall was also halted in Tianjin and Shanghai. However, the overall
trading sentiments were still weak.
Several regions were impacted by
Covid outbreaks, especially in Shanxi, Shaanxi, Inner Mongolia and other
places, resulting in a mismatch between supply and demand of raw materials and
rising inventory.
On the other hand, the
futures-spot spread widened, especially for coke.
Two-thirds of October has passed,
but the market still has not improved. The futures market took the lead in
continuously testing new lows. In the second half of last week, both prices and
trade deals showed signs of weakening. Moreover, finished products affected raw
materials, and hence the second round of increase in coke prices did not
happen. Iron ore showed a w-o-w decline, pressuring down finished products
prices and profits.
Outlook
The government continues to direct
financial institutions to offer concessions in a bid to boost liquidity and
promote employment. It may further offer benefits to boost the economy. The aim
is to bring back market confidence.
There is still demand from
infrastructure construction. Mills are expected to keep a watch on the
performance of the construction sector after the week-long conference of the
Communist Party in a bid to seize the last wave of construction demand before
winter sets in.
A recent easing in real estate
investment policy will leave a financing channel open for housing companies.
However, as a global recession
gathers steam amid inflation and monetary tightening across nations, it is
feared China may not achieve its targeted 5.5% growth in 2022.
Source: Steel mint