Steel prices decreased in China

China's steel market has been experiencing significant fluctuations in recent days. The sharp decline in the output prices of the Tangshan Qian'anpu billet mill has led to a general downward trend in the local markets. Similarly, the country's nine leading steel producers updated their pricing policies, reducing construction steel prices by 20-100 yuan/ton (3-13 USD) towards the end of June.

Rebar prices decreased by 22 yuan/ton (3 USD) to 3,673 yuan/ton (505 USD), compared to the averages measured in 31 major cities across the country. This decline was largely due to the weakness in demand due to the approaching rainy season of Eastern China and the high temperatures of the northern regions. While construction steel prices are expected to rise in the domestic market in the coming weeks, a fluctuating course may be observed in the short term.

The prices of hot rolled coils also decreased by 11 yuan/ton (1.50 USD) to 3,764 yuan/ton (518 USD), compared to the average measured in 24 major cities across the country. Although steel mills have partially reduced production, the rapid accumulation of social stocks shows that unseasonal demand has increased. This reflects the overall bearish sentiment of market traders.

According to statistics, this week the blast furnace steel production capacity utilization rate of 247 steel facilities was 89.76%, with a monthly increase of 0.23 points, while the average capacity utilization rate of 87 independent electric arc furnace steel facilities was 53.73%.

While the profit rate of sample steel facilities increased by 2.17 points monthly to 51.95% this week, hot metal production continued to remain at a high level.

Changes in steel production capacity utilization rates and profit margins reflect the general uncertainty and instability in the industry. Although mainstream steel mills have yet to respond to price increases, independent electric arc furnace steelmakers have experienced slight production disruptions.

As a result, the Chinese steel market is going through a process where seasonal factors, supply and demand imbalances and economic uncertainties come together. Steel prices are expected to follow a volatile course in the near future.