The Chinese steel market is under pressure in August 2023, with no slowdown in production despite weak demand and trade sources expect government-mandated steel production cuts in 2023 to be less stringent than in 2022. Also, according to commercial sources, the utilization rate of blast furnace in China has increased to around 90%.
According to market information, some local producers in the regions had not received any official communication as of August 18, although Hebei and Jiangsu provinces, which are important production centers in China, showed that they could inform large local producers about production cuts.
Some trade sources explained the increase in steel inventories since July as weak demand driven by China's strong steel production and worsening growth in the real estate sector.
Rebar inventories in eastern trading hub Hangzhou increased by about 15% as of Aug. 18 from the start of July and 50% from a year earlier, according to trading sources. Meanwhile, long steel inventories in northern Beijing — mainly rebar and wire rod — were still about 4% lower on the year, but up 22% from early July.
Compared to the end of July 2023, China domestic rebar prices decreased Yuan 144/mt ($19.7/mt) to Yuan 3,722/mt, and hot rolled coil prices decreased Yuan 190/mt to Yuan 3,900/mt.
In Shanghai, as of mid-August 2023, hot rolled coil inventories increased by 27% compared to the previous month.