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Chinese steel prices to edge up in CY'24: Experts

Chinese steel prices to edge up in CY'24: Experts

Chinese steel prices will probably edge up overall next year as domestic- and international-market demand is likely to expand slightly, while the persistently high prices of feed materials will continue to provide cost support, according to panel discussion participants at Mysteel's annual conference in Shanghai held on 16 December.

"Rebar prices may fluctuate between Yuan 4,300-4,500/tonne ($606-634/t) next year, as steel demand from the infrastructure sector will show a solid rise, making up for the contraction of the real estate market," said Xie Chao, senior vice president of Chongqing Iron & Steel (Group) Co., a state-owned steelmaker headquartered in Southwest China's Chongqing.

So far this year, Mysteel's assessment of China's national price for HRB400E 20mm dia rebar has moved in the range of Yuan 3,680-4,416/t including the 13% VAT, with the average price at Yuan 3,989/t, the data showed.

"Compared with this year, the average price of rebar may rise by some Yuan 200/t in 2024 to reach Yuan 4,120-4,150/t," suggested Wei Guangming, vice general manager of China Railway Material Group Corporation, noting that he holds a "cautiously optimistic" outlook for domestic steel prices.

The consensus among the panellists was that infrastructure construction - spurred by economic stimulus policies - will become a major force driving up China's steel consumption in 2024.

"I would expect the government's investment in the infrastructure sector to increase 7-8% next year - a necessary level of growth for stable economic development - and I imagine that domestic steel demand will see annual growth of 10 million tonnes," stated Yuan Wenjiong, general manager of Dao Fortune Co., a trading company in East China's Zhejiang.

"As for other steel-consuming sectors such as new energy vehicles, home appliances, and shipbuilding, their performances will not be inferior to this year," he added.

In addition to the domestic market, overseas steel end-users may also have stronger demand in 2024, which is likely to keep Chinese steel exports at a high level, according to the panellists.

During January-November this year, China's total finished steel exports surged 36% on year to reach 82.7 million tonnes (mnt), according to the data released by China's General Administration of Customs. The panel believed that the total volume for full year 2023 would be around 90 mnt.

"Next year, steel demand in the international market will increase by at least 1% - namely 10 mnt- and China's steel exports will stay largely stable at 85-90 mnt," Yuan predicted.

However, Chinese steelmakers will probably struggle to see any increase in their profits on steel sales next year, the panel participants warned, arguing that iron ore prices will likely remain buoyant. This will keep supporting steel prices but at the same time squeeze the mills' margins, they said.

"I used to believe that as long as China's steel production decreases, iron ore prices will retreat in line, but now I have different idea," Yuan admitted. "The global pattern of iron ore supply and demand has changed," he observed.

"China is no longer the only buyer, as many developing regions such as Southeast Asia and the Middle East are expediting their infrastructure construction (and) iron ore demand is growing rapidly," he explained, predicting that the peak point of China's imported iron ore prices may touch $150/t in 2024.

As of 15 December, Mysteel SEADEX 62% Australian Fines was at $135/dmt CFR Qingdao, only $2.4/dmt lower than the highest level of this year, according to Mysteel's assessment.

Source: Steel mint


Dec 27, 2023 08:42
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