Steel Prices on the Rise, China Steel Corp Make Its Move

China: China Steel Corp announced that hot-rolled plate steel and cold-rolled coils prices will be raised by NT$500 to NT$1,000 per tonne for next month’s domestic deliveries. This is due to increased global inflation and the reopening of China, which has boosted demand. The Kaohsiung-based firm mentioned that the adjustments won't reflect the full cost of raw materials but rather take a progressive approach to give downstream firms time to adjust to the business cycle.

In regard to the upcoming Lunar New Year holiday, a lenient strategy was adopted. This marks the second consecutive month China Steel has raised prices on hot-rolled plate and cold-rolled coils, which are used in construction and vehicle manufacturing. The scrapping of Beijing's “zero COVID-19” policy last month allowed for replenishment of inventory at steel suppliers. This pent-up demand further highlights this change in pricing trends.

China Steel Corp's measures to stimulate economic activity are set to give the real-estate and automotive sectors a boost. These two major steel product buyers have been hampered by supply chain bottlenecks for the past three years, but lockdown removal is expected to solve this issue. The World Steel Association anticipated a 1 percent increase in global steel demand to 1.815 tonnes in 2023, however this figure is likely to be higher due to improvements in the market. A 5.6 percent leap in vehicle production up to 83.6 million units this year, as chip shortages are predicted to diminish.

Concerning supply levels, Europe's steel production dropped 40 percent or 64 million tonnes last year and Chinese steel output decreased 2.2 percent. In accordance with World Steel Dynamics analyses, crude steel output could hit 18.22 tonnes - down 1.5 percent in 2023 leading to an inventory rise next month.

According to China Steel Corp, Baowu Steel Group - the world's largest steel producer - revealed a hike of 50 yuan to 100 yuan (US$7 to US$15) per tonne in factory prices for next month. This leads to an anticipated U-shaped recovery in steel prices that companies must be ready for by stockpiling necessary raw materials.