Steel prices dip to the lowest in 3 years, hurt by Chinese oversupply

livemint.com:

₹52,300 per tonne in July, the lowest since December 2020, according to data from market research and consulting firm BigMint. The prices continue to fall and are trading at around ₹51,000 per tonne currently, the analysts said. “A significant slowdown in China's economy has led to a correction in global steel prices, with Chinese export prices hitting a four-year low," according to Dhruv Goel, the chief executive of BigMint.

China hosts half of the world’s annual 2-billion-tonne steelmaking capacity and until recently had a similar share of steel consumption too. But a weakness in China’s real estate market has left Chinese manufacturers with overcapacity. They are selling this metal in India and elsewhere at a price below their production costs to keep their mills running, Indian steelmakers allege.

“Chinese domestic demand is muted owing to weakness in its property sector," said Aditya Welekar, senior research analyst, Axis Securities. There could be more pain in store, Welekar warned, if reports are to be believed that China is shifting its policy focus from real estate and infrastructure to consumption, technology and high-tech industries. “While we might be around the bottom for prices, given that Chinese mills are incurring losses at the current HRC rates, any significant price increase will likely depend on whether the Chinese government introduces a stimulus to boost domestic demand or cuts down its steel production," Welekar added.