The prices of steel products experienced moderate volatility in Inner Mongolia during the first half of 2023, according to the local development and reform commission.
In terms of monthly steel price changes, steel prices from January to March saw a sustained small increase backed by continued improvement in market expectations and steady progress of major projects, coupled with continuous implementation of favorable macroeconomic policies and increased raw material prices under the adjustment of policy on the COVID-19 epidemic.
The steel market in April and May extended weakness with lower-than-expected demand recovery, due partly to persisting sluggish property market, slow progress in local government bond issuance and infrastructure projects, and partly to lower raw material prices.
In June, waves of extreme heat and rainfall caused a slowdown in downstream construction progress, subdued trading in most markets and a traditional off-season in steel market. However, stimulated by improved macroeconomic expectations and overall price stabilization of raw materials, steel prices rebounded to stabilize.
The average prices of construction steel and common plate steel in Inner Mongolia over the month were 3,926.11 yuan/t and 4,305.71 yuan/t, respectively, with a slight 0.87% increase and a marginal 0.48% decrease compared to May. The prices were 3.94% and 2.74% lower than the start of this year.
Looking at overall price changes, the prices of construction steel and common plate steel in January-June were averaged at 4,110.06 yuan/t and 4,440.45 yuan/t, declining 17.22% and 17.24% year on year respectively.
Looking ahead, despite the current global political and economic situation being complex and challenging, China's economy has shown signs of recovery and improvement. The first quarter achieved a good start, and the rebound continued in the second quarter. Manufacturing PMI climbed back in June, and a series of positive macroeconomic stimulus policies were implemented, boosting market confidence.
However, it is important to note the prominent pressure of demand contraction and limited demand increment from major end-users. Recently, the National Development and Reform Commission took measures through collaborating with seven banks to drive the growth of steel demand.
In terms of cost, slight swings in iron ore prices, stable to rising prices of scrap steel, and the implementation of coke price hikes have all provided strong support.
China's steel exports are still on the rise. Although the overseas manufacturing boom has declined, steel exports from China remained motivated against the backdrop of weak domestic demand and the depreciation of RMB against the US dollar.
Steel prices in the third quarter of Inner Mongolia are expected to be stable within marginal fluctuation.
(Writing by Riley Liang Editing by Emma Yang)
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