The China Iron & Steel Association (CISA) called for the calmness among the Chinese steel mills, and to maintain normal operational orders at their best while battling against the Novel Coronavirus (2019-nCoV), and the overall market situation is expected to improve in the second quarter when the virus spread is within control or completely defeated, according to an open letter by CISA posted on the China Metallurgical News on February 5. “The impact of the virus will hit the steel sector mainly in the first quarter, more so on the downstream users than on the steel producers, and decreases in the prices of raw materials and steel, thus, are expected,” CISA predicted. However, both steel production and sales will show signs of improvement in the second quarter when “the virus is under control or completely defeated and the impact recedes accordingly, and the domestic steel demand will revive substantially when Beijing further enhances its efforts in counter-cycle adjustments and local authorities are able to execute their economic stimulating measures”, it added. Meanwhile, the association called for the Chinese steel mills to adjust their production paces according to the demand, orders on hand, capital flow and transportation, to avoid malicious competition via pricing wars, and help to safeguard the market order. Blindly increasing output when the demand is weak will only lead to the excess finished steel stocks and pose a growing threat to the market revival when the battle is over, CISA warned. “Demand is still there, it has just delayed in emergence, not evaporated,” the association emphasized. Mysteel’s latest surveys among the 184 steel producers and the traders in a total of 35 Chinese cities at the start of February showed that the inventories of the five major steel products swelled 6.1 million tonnes from late January before the Chinese New Year holiday to a total of 23.3 million tonnes, among which the inventories at the steel producers hiked to 8.3 million tonnes compared with about 5 million tonnes for most of 2019. Some Chinese mills have been idling their rolling mills recently to reduce the finished steel output as the first counter measure against the market lull amid the virus outbreak, Mysteel understands from related surveys. In the post, the association requests all the steel market intelligence providers to truthfully share and reflect steel market situations and prices to contribute to the stability and sustainability of the Chinese steel market. The virus outbreak may disrupt China’s economic development in the short term, but the country’s economic growth will be back to its normal pace and path with the rein-in of the virus spread, and the situation will turn much better in the second half of the year, CISA predicted, adding that China’s central government has always had the policy support on standby to guarantee a stable national economy as well as the accomplishment of the mission to become a well-off society by the end of 2020.
Source: https://www.mysteel.net/article