SHANGHAI, Jul 22 (SMM) — Operating rates of blast furnaces at steel mills fell 0.2 percentage point from a week ago and decreased 3.7 percentage points from a month ago to 81.2% as of July 22, SMM survey showed.
Production reductions have been strictly implemented in many places across the country, and the scope of reductions has continued to expand. However, based on the actual production, the crude steel output is highly likely to exceed the volume last year.
In terms of supply, there was more news of production suspension and stricter production restrictions in Tangshan, which further increased the expectations of the reduction of local production, and market quotations rebounded.
Under the current pressure of production safety and the expected production cuts in H2, steel mills are more willing to hold prices high. The overall prices are likely to stay upward.
The demand remained weak amid the heavy rains in north China and the typhoon in some southern regions, and the rains will continue to affect downstream operating rates and transportation. The demand is hard to rebound in the short term, weighing on the price increase of steel.
The National Standing Committee, National Development and Reform Commission, and the Ministry of Industry and Information Technology took frequent measures to curb the price increase, and the upward trend of steel prices has slowed down significantly. The steel prices will continue to be suppressed by policies as the surging prices will cool the demand.
Therefore, transactions remained sluggish despite the recent increase in market quotations. The short-term demand will stand low due to the heavy rains and typhoon. Meanwhile, due to the safety inspections and higher expectations of product cuts, steel mills held prices high, which boosted market sentiment.
Steel prices are expected to rise steadily in the short term, but in a limited range.
