Industrial production increased by %5.2 year on year, while retail sales increased by only %0.4. During the January-August period, real estate investment decreased by %19.9. Crude steel production also decreased by %5.5 year on year.
Exports increased by %25 in August, supporting industrial production. However, part of the increase may have resulted from shipments being brought forward. Therefore, September export data and new export orders will be important for assessing the sustainability of external demand.
In China’s steel raw materials market, supply restrictions supported prices in August. Coking coal prices increased by approximately %46 due to production cuts in Shanxi, while iron ore and rebar prices also increased. However, these products have started to decline since the beginning of September. The market is expected to shift its focus from supply restrictions back to weak demand.
In the fourth quarter, exports are expected to continue supporting economic activity in China, while weakness in the real estate sector and domestic demand is expected to persist. A more significant improvement in real estate and infrastructure investment will be needed for a sustained recovery in the steel market.
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