China Steel Market Faces Major Price Decline, BofA Analysts Report | Investing.com
Last week, China's steel market experienced a significant drop in prices, according to experts at BofA Securities. Steel export prices from China saw a sharp decrease, with hot rolled coil (HRC) falling by $31 per ton to $449 per ton, and rebar prices declining by $28 per ton to $462 per ton.
This price slump reflects the ongoing struggles of the Chinese steel industry, worsened by weak demand and economic challenges. BofA analysts noted that cash margins for Chinese steel producers have shown mixed results, with spot cash margins for rebar improving slightly but remaining in negative territory, while HRC margins worsened.
The situation has led many steelmakers to implement voluntary production cuts, resulting in lower utilization rates for blast furnace (BF) and electric arc furnace (EAF). The overall market sentiment remains pessimistic, with concerns raised by industry leaders about the future prospects of the Chinese steel sector.
Analysts predict that the weak steel demand is unlikely to improve in the coming years, mainly due to a sluggish property market that accounts for a significant portion of China's steel demand. With new construction starts plummeting and infrastructure investment remaining weak, the outlook for China's steel industry appears challenging.
In conclusion, the ongoing struggles in the Chinese steel market are expected to persist, with prices and profitability likely to remain under pressure in the near future. Unless there is a significant uptick in demand, the industry may continue to face difficulties well into 2025. Investors and stakeholders should monitor these developments closely to make informed decisions about their investments in the steel sector.