Macquarie’s excellent monthly steel mill sentiment survey leaves no room for doubt. Chinese steel is in a full blown boom:
Sentiment among players in the steel and iron ore industries remains very bullish this month, particularly on the steel side. The market is holding a positive outlook on steel prices based on the expectation that demand will be even better into the peak season, while supply will be impacted by the winter curtailment policy (to start from 15th Nov). End-user demand has defied seasonal trends, but with traders now beginning to restock steel, there is risk that sequential demand growth into the traditional peak season may not be as strong.
Orders and sales: Mills’ orders have continued to grow over the past month defying seasonal trends that typically see Chinese steel demand slowing down during the summer months. Infrastructure and construction have been driving demand growth since March, while machinery and auto picked up again in August after two quiet months. The strong growth so far in Q3 gives rise to some uncertainty around the strength of the usual, seasonal uptick in demand in September, due to a higher base and a possible front loading of restocking demand.