Chinese steel prices nearing bottom, oversupply concerns likely to persist : CISA

BEIJING (Scrap Monster) :  According to report released by the China Iron and Steel Association (CISA), the steel prices are seen bottoming out, but may remain at these lower levels for quite some time. Despite production cuts by some mills in the country, the oversupply situation is also expected to continue.

CISA states, as on May end, the Iron and Steel Association CSPI composite steel price index was 101.83 points, down 3.92 points over April, with long steel sheet prices falling more. Prices of all the eight varieties of steel fell during the month of May. Steel prices continued to sustain the downtrend. The downstream demand for steel was not up to the expectations, thus widening the gap between supply and demand, leading to oversupply situation. The steel de-stocking has accelerated during the month but the overall stock levels are still high, CISA indicates.

The Chinese steel demand has slightly improved during the second quarter. However, Chinese steel exports have faced challenges due to international trade frictions.

CISA predicts further decline in iron-ore prices. The steel prices may continue to remain in the low range with small fluctuations expected in near term. The production cuts by some steel mills in the country may ease the oversupply situation to certain extent.