Platts, Beijing

Big drop seen in expectations for domestic and export steel prices in July

The outlook for steel prices in China slumped to a six-month low, while expectations for domestic orders during July also deteriorated, according to the latest Platts China Steel Sentiment Index (Platts CSSI) for July, which showed a headline reading of 26.5 out of a possible 100 points. “Steel prices in China were in free-fall in June despite slightly stronger iron ore prices,” said Paul Bartholomew, Platts managing editor, steel & steel raw materials. “Therefore, mills and traders were bearish about the prospects of any near-term price recovery, particularly as steel demand is expected to slow in the hotter summer months. Steel market participants anticipated higher steel production and inventories for July, which could add to the downward pressure on steel prices.”

The July index fell 15.7 points from the June level of 42.2 and was the weakest reading since the Chinese New Year holiday period in February. The outlook for prices of both long- and flat-steel products dropped below the 50 threshold following three consecutive months of stronger expectations. The outlook for new domestic steel orders showed a large drop for the second consecutive month, to 26.4 from 43.2 in June; while export order expectations were almost flat on the previous month at 28.3.

The outlook for crude steel production in July edged up to 50.0 from 44.4 in June, while expectations for steel stocks held by traders rose 3.8 points from June to 42.4.

“Despite strong steel exports out of China this year, mills and traders seemed downbeat when queried in July about the prospects for the market,” said Bartholomew. “Perhaps this is because of the plethora of international trade cases against Chinese steel imports currently underway.”

Platts, Beijing