The ferrous complex was weak on July 8, 2022:

There is nothing good going on in Chinese steel:
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China’s steel mills are sounding the alarm over crisis conditions in the industry as margins plunge due to weak demand.
The starkest warning yet has come from Hunan Valin Iron & Steel Group, which met this week to discuss the rapid downturn in the sector and the measures it needs to take to ensure the company’s survival, including halting unprofitable production. Citing industry experts, the mill based in southern China said it expects the crisis to persist for five years.
Iron ore prices fell again on Friday, weighed by the gloomy demand outlook in China. Benchmark 62% Fe fines imported into Northern China fell 0.5%, to $113.68 per tonne.
Other mills in both the northwest and southwest of the country have pledged to reduce output as they wait on infrastructure spending to revive steel demand. Stockpiles have swollen way beyond seasonal norms after China’s crackdown on its property sector and its Covid Zero policy curbed construction activity. The steel industry’s purchasing managers’ index for June recorded its worst reading in a decade last week.
“The risk for China is that the current negative sentiment overcomes an expectation that Beijing’s stimulus measures will fire up the economy in the second half of the year,” wrote Reuters columnist Clyde Russell.
Nearly 90% of Chinese steelmakers suffered losses from weak sales and low prices, according to Chinese industry data provider Mysteel.
Although stockpiles were finally being drawn down at the end of the month as China rolled back some of its toughest virus restrictions, they’re still 23% higher than a year ago, according to the latest survey from the China Iron & Steel Association.
President Xi Jinping has called for an all-out push on infrastructure to rescue the economy, but it’s unlikely that will fully make up for demand lost from the real-estate sector.
Cutting output, at least from last year’s levels, is likely to suit both industry and government, as reduced supply will support prices as well as aid Beijing’s mission to cap carbon emissions from the highly pollutive sector.
For steel demand, the property crash is going to overwhelm infrastructure stimulus for the remainder of 2022:
If we assume that sales stabilise to flat year-on-year by December, then property starts floor area is about halfway down on a rolling annual basis:

This is a peak-to-trough fall of 16% for Chinese steel demand. That is roughly 150mt less steel demand year over year.
To offset this, last week China announced new stimulus in the form of a special local government bond quota. If fully deployed it will lift LGFV debt by 40% versus 2021. That translates to 40% growth to 20% of steel demand. Or, roughly 80mt new demand.
But I am not including any downdraft in wider fiscal revenue from crashed land sales for local governments which will materially hamper stimulus. Nor am I including the building global shock to Chinese export volumes.
It all tallies to a considerable further downside for steel consumption in China for the rest of 2022. A conservative base case of 100mt less iron ore demand year on year (assuming it does not all come out of EAF) and probably worse.
Hence this:
Worldwide steel prices are crashing for good reason.
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.
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