China's steel prices expected to keep increasing in October

China's steel prices experienced a notable surge in September, and experts predict that this upward momentum will persist through October. Building materials are expected to see a larger price increase compared to sheet metal, driven by several key factors.

One of the primary drivers is China's recent monetary and fiscal policies aimed at stimulating economic growth. Measures such as the 0.5% reduction in the reserve requirement ratio, the injection of 1 trillion yuan (approximately USD 137 billion) into the economy, and lower interest rates on existing housing loans—now close to those of new loans—are all expected to boost economic recovery.

Another factor contributing to rising prices is the decline in steel inventories, leading to a pronounced supply-demand imbalance. Building materials, in particular, have seen a one-third reduction in stock levels. As steel mill profitability improves, production is set to ramp up again, further influencing the balance between raw material supply and demand.

Additionally, there is a growing divergence between long and plate products. Due to the higher inventory levels of plate products compared to longs, the price increase for long products is expected to outpace that of plate products, driven by lower stock and higher demand.