Sentiment towards China’s steel market remains strong, as shown by our latest proprietary China steel survey. Steel mills reported a continued increase in their order volumes thanks to strong demand from auto, machinery and infrastructure sectors. Their capacity utilisation rate remained stable despite better profit margins, most likely influenced by recent environmental-related pressures.
Steel mill inventory declined over the past month as a result of higher demand growth, but traders steel inventory slightly increased, which is most likely due to softening demand from the construction sector. Chinese steel mills have clearly restocked iron ore in the past month but we see little room for further increases, a potential negative for iron ore demand. Meanwhile, mills’ coking coal inventory finally stopped falling as supply has clearly eased.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
