Chinese steel prices hit a ten-year low as stocks reach a four-year high

The China Iron and Steel Association (CISA) presented its third-quarter review on October 30: output, demand, exports and prices down; stocks and costs up. From January to September, crude steel output was 725 million tonnes (−2.9%) and apparent consumption 625 million (−3.8%), according to official data cited by the association. Rebar fell 17.18 million tonnes while medium plate rose 4.91 million.

Steel exports were 85.64 million tonnes (−2.6%) at an average US$709 per tonne (+1.8%). CISA says that since steel export licences were introduced, overseas sales show lower volume and higher prices. Imports were 4.07 million tonnes at US$1,847 per tonne.

Average stocks at monitored mills were 16.85 million tonnes, the highest in four years. The CSPI price index averaged 92.28 points, the lowest for the period in ten years, while the international CRU index rose 12.2%. In September, coking coal averaged 1,916 yuan per tonne, 51.2% more than a year earlier.

Profits at monitored companies fell 27.4% to 71.8 billion yuan, and 29.6% of them made losses. Core steel profits fell 75.2%. CISA called for production discipline and said about ten mills will receive warnings for not following self-discipline rules.

CSP take: Chinese steel remains cheap at home and dearer abroad, keeping export pressure on even with licences. Buyers of steel or steel-heavy products should watch for a rise driven by coal and output cuts. This reading is ours, not CISA’s.