Despite the decline, there are some positive signs in the Chinese steel market. While steel production fell by 3.0% on an annual basis between January and April, the manufacturing PMI index continued to expand for two consecutive months. This shows that supply and demand in the steel market have begun to recover.
Chinese authorities are also working on illegal steel exports. Recently, the activities of some steel producers who were engaged in tax evasion were stopped, which helped steel prices to improve.
High prices of raw materials such as coal and iron ore continue to make steel production difficult. Despite this, the recent stable recovery trend is expected to continue.
Implementation of policies supporting the housing sector, such as the People's Bank of China's RMB 300 billion affordable housing financing program and reducing down payment rates, can contribute to a steady recovery in steel demand.
In the long term, China's crude steel production is expected to vary depending on fluctuations in global demand and the country's economic development strategy. A focus on infrastructure investments and innovative products can deliver future growth for the sector.
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