China’s steel market is poised for potential demand growth in November, according to forecasts by industry analysts. This outlook follows data that shows improvements in the country’s manufacturing sector, driven by a steady recovery in the Purchasing Managers’ Index (PMI). In October, the manufacturing PMI reached 50.1, marking its second consecutive month of growth, as reported by the National Bureau of Statistics.
The gains in manufacturing PMI were bolstered by positive results in both the production and new orders indices. Additional economic indicators, including retail consumption and fixed asset investment, also reflected moderate growth compared to September. This overall economic resilience is expected to provide some support for steel prices.
Despite these favorable signals, steel production levels remain a concern. High output at steel mills is expected to exert pressure on prices, particularly as many producers are still able to generate profits from their sales. Consequently, it is unlikely that major production cuts will be made in the near term, suggesting an increase in the market's steel supply.
Projections indicate that steel supply in November could rise by as much as 1 million tons, potentially outpacing demand growth. This shift may halt the decline in steel inventories. As of late October, total basic carbon steel stocks held by producers and traders in 35 major Chinese cities had dropped by 7.8% compared to September, reaching approximately 12.3 million tons—the lowest level recorded since December 2019.
The combination of robust production and limited stockpiles suggests a complex market dynamic. While oversupply could dampen market sentiment, the current low inventory levels are expected to prevent significant price declines. Analysts predict that prices will remain within a narrow range through November as the market watches for potential economic stimulus measures from the government.
Comments
No comment yet.