On April 26, the China Iron and Steel Association (CISA) released its latest data showing that the average daily crude steel output from its member companies in mid-April was 1.8891 million tons, a slight decrease of 0.48% compared to the same period last year. Meanwhile, the average daily steel output was 2,115,800 tons, down 0.38% from the previous period.
The figures indicate that despite ongoing losses in the industry, the pace of destocking remains sluggish. At the end of mid-April, the total steel inventory held by CISA members stood at 13.6661 million tons, marking a 0.52% decline from the end of the previous decade.
Industry analysts told *Securities Market Weekly* that domestic steel prices have been on a downward trend since the Chinese New Year. As of now, construction steel and plate prices have dropped by 300–400 yuan per ton, while hot-rolled coil prices have fallen by approximately 600 yuan per ton.
Analysts also pointed out that in January and February 2013, major and medium-sized steel companies under the CISA reported a small profit of 2.336 billion yuan. However, with rising costs due to higher-priced iron ore and increased contract commitments in March, it is expected that these companies will suffer losses in March, with the loss widening in April. Based on current production costs and market prices, most steel mills are operating at a loss of 150–200 yuan per ton. Some have reduced production or scheduled maintenance, but the scale remains limited.
Furthermore, analysts believe that with steel prices hitting their lowest level in six years, there is little room for further declines. On one hand, steel mills are now in full-scale losses, making it unrealistic for traders to push prices even lower through aggressive price cuts. On the other hand, current market inventories are scattered, with large traders holding low stock levels. Compared to previous years, inventory has significantly decreased, and most available resources have already been sold. As a result, traders lack the incentive to sell more inventory.
Therefore, the potential for further price drops is limited, though upward movement is still constrained by overcapacity and weak steel trade financing. It is expected that steel prices will remain volatile throughout May.
The CISA also suggested that the steel price cycle may be coming to an end. For example, Baosteel maintained stable factory prices for its hot-rolled and cold-rolled products in May, but order preferences have increased. Meanwhile, Wuhan Iron and Steel cut prices by 100–240 yuan per ton, Anshan Iron and Steel reduced plate prices by 100–150 yuan per ton, Shougang lowered coil prices by 150 yuan per ton, and Hegang cut plate prices by 200–250 yuan per ton. These moves suggest that steel mills remain pessimistic about future market conditions.
Although the steel industry is entering its peak season, demand remains weak. The domestic steel market continues to face a supply-demand imbalance, and prices are expected to fluctuate in May.
At a recent industry conference, the Deputy Secretary-General of the China Iron and Steel Association told *Securities Market Weekly* that crude steel production in 2013 is expected to reach around 746 million tons, with apparent consumption at about 700 million tons. Throughout the year, steel prices are likely to show a low, high, and volatile upward trend.Jiangmen Nichiyo Decorative Material Co.,Ltd. , https://www.nichiyopt.com