According to the latest monthly report by the China Iron and Steel Association, Chinese steel prices are expected to remain in slight swings after recent price hikes in the near future, as demand from consumer steel industries may be underperforming with slow growth. The association noted that the impact of global geopolitical conflicts may also exacerbate uncertainties surrounding the global economy’s recovery.

In the case of China’s domestic market, improved demand among consumer steel industries failed to meet market expectations, and the ongoing collapse of the property sector may continue to negatively affect steel consumption. During January to October, China’s crude steel production recorded a 1.4 percent increase compared to the previous year, while the country’s apparent crude steel consumption fell by 2 percent, suggesting an imbalance between supply and demand is still in place. However, steel inventories have steadily declined, easing market pressure from the supply side somewhat.

Currently, steady performance of sectors such as infrastructure, manufacturing and export industries is the driving force behind China’s steel consumption, while stability is a market concern.

In addition, Chinese steel producers continue to face many challenges in reducing their production costs, as imported iron ore prices have been high. In October, the average price of imported iron ore reached $US112.9 a tonne, up 22.7 per cent from last December, while steel prices in the domestic market were down 5.1 per cent in the same period.