Chinese Mills’ Q3 Outlook ‘Gloomy’: Analytics China

July 13, 2010 in Blog by

In a survey of Chinese steel producers, a recent report by Steel Business Briefing Research & Consulting finds that a majority of mills are pessimistic about steel pricing and production in the coming quarter.
 
A significant majority of mills surveyed for SBB’s weekly Analytics China report (representing just under half of China’s total crude output) expect Chinese steel demand to be flat or lower in the third quarter compared with Q2. Fewer than 15% of respondents forecast an increase.
 
Mills point to uncertainty over government policies, as well as seasonal factors, as contributing to the bearish outlook on Q3 demand. However, demand from government stimulus projects is widely expected to last for at least another year.
 
Many respondents believe that Chinese steel prices still have some way to fall before bottoming out, with almost half expecting prices decline further in Q3 compared with the second quarter. Less than 20% of respondents forecast an increase in Q3 prices.
 
A large number of those surveyed expect production at their mill to fall over the July-September quarter, with half planning production cuts as a result of maintenance or poor demand. However, considerably more mills surveyed expected production at a national level to fall than those planning cuts, suggesting that many expect production cuts to fall more heavily on other mills.
 
None of the mills surveyed expect an increase in exports in Q3, with a majority expecting declines in volumes.

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