A series of “mini-stimulus” policies designed to rejuvenate China’s flagging economy will help support steel demand over the coming months, but prices will continue to be weighed down by a supply glut, the country’s steel association said on Thursday.
A Reuters report said China’s economy grew at an annual rate of 7.5 percent in the second quarter, up slightly from 7.4 percent in the first three months of the year, responding to a modest stimulus package that included tax cuts for small firms, reserve requirement cuts for some banks and infrastructure spending.
New housing construction helped drive an improvement in steel demand in June, and inventory levels declined 5.65 percent from the end of May, but prices still remained near 11-year lows, the China Iron and Steel Association (CISA) said.
The day’s biggest mover broke away from a static phase with a 6.3 percent jump on Wednesday, July 16. After three changeless days on the LME, the cash price of steel billet closed at $420.00 per metric ton. On the tail of a three-day flat streak, the steel billet 3-month price rose by 6.2 percent on the LME, settling at $425.00 per metric ton.
Chinese steel prices closed flat for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($135.34) and a low price of CNY 830.00 ($133.73) per dry metric ton. At CNY 3,380 ($544.57) per metric ton, the price of Chinese HRC was essentially unchanged. For the fifth day in a row, the price of Chinese coking coal remained essentially flat at CNY 1,390 ($223.95) per metric ton.
The US HRC futures contract 3-month price improved by 0.5 percent, closing at $642.00 per short ton on Wednesday. The US HRC futures contract spot price saw little change in its price yesterday at $670.00 per short ton.