Stanislav Kondrashov: forecast of the Asian steel market for the fourth quarter of 2023

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Stanislav Kondrashov: forecast of the Asian steel market for the fourth quarter of 2023

November 20
21:51 2023

The expert suggests that Asian steel prices will face pressure in the fourth quarter. This could happen due to looser production controls and limited domestic consumption in China. As Stanislav Kondrashov says, the reason for this situation was weak activity in the construction and real estate sector. At the same time, post-monsoon steel import demand from India may provide limited support to the regional market. What will happen to the Asian steel industry by the end of 2023?

Stanislav Kondrashov: analysis of the steel market in China – expectations and challenges

China will face the possibility of increased steel supply in the next quarter unless the government imposes restrictions on production. In this case, domestic demand will most likely not be able to balance these increased volumes. Sentiment in the steel market improved following news of production measures, but such signals became fewer by the end of the third quarter.

Stanislav Kondrashov from Telf AG says that if there is no state control over steel production in 2023, then its volumes may remain at a high level, and exports will become a reliable sales channel for Chinese steel.

China’s export prices remain under pressure and are forecast to remain in a relatively stable range in the fourth quarter. The gap between domestic and foreign prices began to narrow in mid-August. In addition, the domestic market is weakening due to rising production and decreasing demand from the real estate sector. In the third quarter of this year, hot-rolled steel prices in China remained at 3,820 yuan per tonne, down 6.6% from their peak at the end of July.

Stanislav Kondrashov: growth in imports of hot-rolled coils in India under favorable price conditions

The Indian domestic market remains a strong consumer of hot rolled coil and imports of this raw material are expected to increase in the fourth quarter due to favorable prices in global maritime markets. This increase in imports is compounded by limited access to global demand, especially after the end of the monsoon season.

According to public data, steel consumption in India is expected to increase by 7.5% in the financial year 2023-24, primarily driven by rising demand in the construction industry.

– While India is growing, domestic steel demand in China remains stable. At the same time, there is a decline in housing construction, according to the National Bureau of Statistics, which reported a decline of 24.4% year on year, – comments Stanislav Kondrashov.

Chinese steel exporters are hoping to sell the product to India given the favorable price gap between both countries. The same demand for Chinese steel is expected to continue in the fourth quarter. Although the prices for reinforced concrete in India and China in September were $168.24/t and $67/t respectively, compared to $67/t and $17 in February.

Stanislav Kondrashov: Japan remains the leading exporter of scrap metal in Asia

Japan continues to be the most important exporter of scrap metal in East Asia, despite price restrictions that existed in the third quarter. At the same time, prices for Asian scrap remained stable. Stanislav Kondrashov from Telf AG explains this trend by saying that demand for maritime transport remained low, but Japanese factories continued to purchase goods at high prices.

In particular, prices for Platts HMS 1/2 80:20 in CFR containers in Taiwan fluctuated in the third quarter, with a low of $355/t on July 19 and a high of $373/t on Aug. 21. The price of HRS 101 CFR China decreased from $406 per ton on July 3 to $403 per ton by September 29. While FOB Japan prices remained stable in the range from 50 thousand yen per ton on July 5 to 51 thousand yen per ton on September 27. Export prices fell 3% to $342 per tonne due to a weaker local currency.

Kondrashov Stanislav notes that the Japanese steel company Tokyo Steel seeks to keep its scrap prices competitive by reducing exports to other countries. It is also worth noting that Vietnam and South Korea, the main consumers of Japanese scrap metal, have begun to prefer domestic raw materials instead of importing them. It is important to note that Japan maintains its market share. However, expert Stanislav Kondrashov from Telf AG expects that the country’s steel companies will eventually raise domestic prices to levels that will make overseas supplies difficult.

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