According to monitoring by the China Iron and Steel Association (CISA), the average China Steel Price Index (CSPI) in September was 92.48 points, up 1.38 points month-on-month (an increase of 1.52%), and down 0.69 points year-on-year (a decrease of 0.74%). At the end of September, the composite index stood at 92.16 points, roughly flat compared with the end of August.
Long products outperformed flat steel. The average CSPI long products index was 94.03 points, up 2.67% month-on-month; the flat steel index averaged 90.94 points, up only 0.87% month-on-month. Among the eight major steel products monitored, only galvanized sheet prices remained unchanged. High-speed wire rod saw the largest increase, rising 94 yuan/ton, followed by rebar, which rose 87 yuan/ton.
Raw material costs remained elevated. In September, the average price of metallurgical coke was 2,104 yuan/ton, up 21.12% month-on-month and 45.26% year-on-year; the average price of PCI coal rose 22.23% month-on-month and 65.07% year-on-year; the average price of coking coal increased 16.03% month-on-month and 56.53% year-on-year. The average price of imported iron ore was US$95.1/ton, slightly down from August. However, demand remained divergent. From January to September, fixed-asset investment fell 7.2% year-on-year, infrastructure investment dropped 4.2%, and manufacturing investment decreased 2.1% (the decline narrowed). Real estate remained the biggest drag: real estate development investment fell 20.6%, new-start floor area dropped 24.9%, and new commercial housing sales area decreased 13.2%.
The macro economy was generally stable, but the steel industry had not yet felt the recovery. The CISA monthly review noted that both the production and new order indexes for the ferrous metal smelting and rolling processing industry were below the critical point.
From January to September, national crude steel output was 724.77 million tons, down 2.9% year-on-year. However, daily crude steel output in September rose 1.9% month-on-month, and daily steel output surged 6.4% month-on-month.
Apparent crude steel consumption from January to September fell 3.8% year-on-year, a larger decline than that of output, indicating prominent supply-demand contradictions.
In early October, key steel enterprises produced 1.939 million tons of crude steel per day, up 3.1% month-on-month; enterprise steel inventory reached 16.97 million tons, up 8.4% from the previous ten-day period; social inventories of five major steel varieties across 21 cities rose to 9.39 million tons, reversing from decline to increase.
In September, the CRU international steel price index rose to 226.6 points, up 2.6% month-on-month and 20.1% year-on-year. The North American market led with 323.3 points, Europe rose to 244.9 points, and Asia climbed to 159.6 points. Indian rebar prices surged 8.26% month-on-month, reflecting tightened supply and cost pass-through.
Entering October, coking coal entered a price reduction cycle, iron ore prices weakened, and cost support diminished. As winter approaches, weakening demand and winter stockpiling expectations are intertwined. The industry is calling on steel companies to avoid blind resumption of production. CISA emphasizes that enterprises should adhere to “benefit first, produce-to-sell,” proactively control the pace of output release, and maintain inventories at reasonable levels. “If enterprises blindly resume production and offset prices with volume, they risk repeating the passive situation of ‘more output, less efficiency,'” the monthly review noted. On the policy front, the central bank cut the PSL interest rate by 25 basis points, and the Ministry of Finance allocated 550 billion yuan in local government debt balance limits to support infrastructure. However, analysts believe that incremental infrastructure investment is unlikely to fully offset the real estate downturn. In September, steel prices fluctuated narrowly supported by costs. The market trend in the fourth quarter will depend more on whether steel companies can implement production control and inventory reduction, rather than a short-term demand recovery.
Note: Excerpted from Steel.com
