China may ease restrictions on steel production next year

Market analysis firm S&P Global Platts  (UK) said that China's steel demand is likely to increase next year in the context of the Chinese government declaring that stabilizing economic growth is a key goal of the country. the country in 2022 and the country continues to reduce the reserve requirement ratio as well as lending interest rates for some groups to ease monetary policy further.

Observers believe that steel supply and demand in China will both improve next year with economic stimulus policies, especially the demand for steel in the real estate and construction sectors. infrastructure will become more active.

In particular, the Chinese Government emphasized that it will keep the country's real estate sector healthy and increase support to keep house prices at a reasonable level in 2022. The easing of monetary policy will also help spur development of infrastructure projects that have stalled this year. Real estate and infrastructure construction currently account for more than 70% of China's total annual steel consumption.

S&P Global Platts quoted analysts as saying that in order to avoid high steel prices that will put great inflationary pressure on the economy as well as ensure employment goals, the Chinese government is likely to stop applying pressure. apply or relax control measures on this country's steel industry, including the current limit on exports of steel and steel products. Even the oversupply of steel in China's domestic market may return next year.

Some steel manufacturers and steel traders in China now forecast that the country's steel output in the first half of 2022 will recover again, equivalent to the level of the second half of 2021. Currently, production activities China's steel is at a weak level due to the country's government imposing restrictive measures to prevent air pollution and low demand for steel from the real estate - construction sector.

Despite the increase in steel output, S&P Global Platts believes that the profit margin of steel producers in China will remain positive due to lower input material costs. Besides, the improved market demand will encourage steel trading firms to increase inventory accumulation.

Reuters news agency said that the spot price of iron ore in northern China has recovered strongly to $ 108.60 per tonne for iron ore containing 62% iron content. This price increased by nearly 25% in just the past 3 weeks in the context of the market's expectation that the demand for steel in this country will improve in the near future.

Chinese government data showed that the country imported 104.96 million tons of ore in November 2021, up 14.6% from the previous October and touching the highest level since July. 2020 – the time when the country begins to promote economic recovery.

Industry and Trade