In late February, the trend of steel prices stabilized as the domestic market experienced a period of weak demand. With rapid growth in steel production, the imbalance between supply and demand worsened, leading to a continuous decline in steel prices. As the weather warmed up, market demand was expected to improve in the later part of the month, but overall, it remained difficult to see a significant recovery, meaning that steel prices were unlikely to rise sharply.
1. **Domestic Steel Prices Continue to Decline**
At the end of February, the comprehensive price index for steel products from the China Steel Industry Association (CSPI) stood at 96.46 points, down by 1.19 points compared to the previous period—a decrease of 1.22%. This marked the sixth consecutive month of declines, with a reduction of 14.66 points, or 13.19%, compared to the same period last year.
2. **Long Products Experience Greater Price Drops Than Sheets**
By the end of February, the CSPI long product index fell to 98.63 points, a drop of 1.68 points or 1.67% from the previous period. Meanwhile, the sheet metal index decreased by 0.74 points, or 0.76%. Long products saw a price decline 0.91 percentage points higher than sheets. Compared to the same period last year, the long product index dropped by 14.66 points (a decrease of 12.94%), while the sheet metal index fell by 15.85 points (a decrease of 14.17%).
3. **Major Steel Products Continue to Fall in Price**
The eight major steel products monitored by the China Iron and Steel Association continued to decline in February. Excluding cold-rolled steel and hot-rolled seamless tubes, price declines narrowed from the previous month. High-line and rebar prices fell by RMB 58/ton and RMB 78/ton respectively, showing the largest drops. Angle iron prices declined slightly by RMB 8/ton, while plates, hot-rolled coils, cold-rolled sheets, galvanized sheets, and seamless pipes fell by 11, 24, 31, 5, and 49 yuan/ton respectively.
4. **Weekly Price Trends Show a Slight Downward Movement**
Throughout February, steel prices showed a slight downward trend on a weekly basis. In the second week of March, the CSPI steel price index had fallen for 11 consecutive weeks.
**Market Analysis of Steel Price Changes in February**
Despite the seasonal slowdown in demand, the steel market remained under pressure due to the rapid growth in production, worsening the supply-demand imbalance. Additionally, the sharp decline in raw material prices weakened the supporting effect on steel prices.
1. **Slower Growth in the Steel Sector and Weak Demand**
According to data from the National Bureau of Statistics, fixed asset investment in January–February increased by 17.9% year-on-year, a 3.3% decrease from the same period last year. The total investment in construction projects rose by 16.8%, 2.0 percentage points lower than the previous year. Industrial output above designated size grew by 8.6%, 1.3 percentage points below the previous year. The manufacturing PMI in February was 50.2%, down 0.3 percentage points from the previous month, marking the third consecutive month of decline. New orders fell by 0.4 percentage points, and the PPI dropped by 2.0% year-on-year, continuing its 24-month negative trend. Money supply growth slowed, with M2 increasing by 14.2% at the end of February, down 0.1 and 0.8 percentage points from the same period last year. Net cash withdrawal for the month reached 1.42 trillion yuan, and new credit additions were only 644.5 billion yuan, down 51.2% from the previous quarter. Overall, demand for steel remained weak in February.
2. **Steel Production Continues to Rise, Worsening Supply-Demand Imbalance**
Total pig iron, crude steel, and steel production in January–February reached 116.72 million tons, 13.80 million tons, and 165.73 million tons, respectively, up 0.2%, 1.7%, and 4.9% year-on-year. The average daily crude steel output rose to 2.217 million tons, an increase of 206,000 tons compared to December, or 10.2%. Exported steel reached 11.57 million tons, up 26.3%, while imports rose by 16.8%. Domestic crude steel supply increased by 9.6% year-on-year, intensifying oversupply in the off-season.
3. **Raw Material Prices Drop, Weakening Support for Steel Prices**
Iron ore and coal prices continued to fall in February, with domestic iron concentrate and imported iron ore dropping by 27 and 50 yuan/ton respectively—down 2.77% and 5.56%. Coking coal and metallurgical coke prices fell by 80 and 110 yuan/ton, a drop of 7.34% and 8.45%. Scrap prices also declined by 24 yuan/ton. These sharp declines further weakened support for steel prices.
**International Market Trends**
At the end of February, the CRU global steel price index stood at 164.9 points, down 3.4 points from the previous quarter, or 2.0%—a decrease of 16.2 points from the same period last year, or 8.9%.
1. **Long Products and Sheet Prices Continue to Decline**
The CRU long product index was 179.8 points, down 4.4 points or 2.4% from the previous month. The sheet metal index fell to 158.2 points, down 2.7 points or 1.7%. Compared to the same period last year, long product prices dropped by 22.4 points (11.1%) and sheet metal prices fell by 12.5 points (7.3%).
2. **Price Trends Differ Across Regions**
North American steel prices fell after rising earlier, while European prices rose slightly before falling. Asian markets continued to see declining prices. In the U.S., the steel price index dropped significantly, especially for sheet metal. In Europe, German and Italian manufacturing PMIs fell, while French PMI remained below 50. In Asia, Japan and South Korea saw declines in export orders, affecting steel prices.
**Future Outlook**
As temperatures rise, domestic steel demand is expected to gradually recover. However, with economic pressures still present, steel demand growth is slowing. In the short term, oversupply remains a challenge, so steel prices are likely to stabilize but not rebound sharply.
1. **Economic Growth Remains Strong, Driving Steel Demand**
China’s GDP target for the year is set at around 7.5%, with continued fiscal and monetary policies aimed at maintaining steady growth. Fixed asset investment is expected to grow by 17.5%, and urbanization remains a key driver of infrastructure development, which will continue to boost steel demand.
2. **High Inventory Levels and Slow Demand Growth**
As of early March, the CSPI steel price index hit a low since 2006. Despite expectations of a bottoming out, inventory levels remain high, and with slower demand growth, steel prices may face downward pressure.
3. **Raw Material Prices Still Have Room to Fall**
Imported iron ore prices fell to $107.89/ton, while coking coal prices have risen. Raw material prices still have room for further declines, adding more pressure to steel prices.
**Key Issues to Watch in the Future**
First, high steel production levels continue to suppress price rebounds. Second, low steel prices hurt enterprise efficiency. Third, increasing international trade tensions make steel exports more challenging.
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