Crude steel output of China’s major steel mills at the end of March reached about 2.16 million tons/day, up about 5.4% compared to the middle of the month, according to the China Iron and Steel Association.
Major steel producers produced 23.8 million tonnes of crude steel around the end of March, China Iron and Steel Association data showed.
During this period, daily iron and steel production increased by 3.47% compared to mid-March, while coil steel production increased by 5.18%, according to Xinhua News Agency.
According to MEPS International, recently, COVID-19 infections are increasing in many provinces and cities of China. Millions of people have been placed in new isolation wards.
Although governments in most other countries have begun to lift travel restrictions and abandon all COVID-19 prevention policies, China has not followed suit. This is negatively affecting domestic steel demand and prices in China.
COVID-19 testing of drivers is creating bottlenecks in transportation.
Ports are also becoming severely congested due to closures or delays in docking ships. As a result, the country’s supply chain is gradually stalling.
In addition, the movement of people is restricted, reducing the labor force, including the steel sector.
Many factories have closed completely or partially, workers working under a closed, on-site model. Some construction sites are also closing.
Therefore, steel inventories in the Chinese market are increasing again. Steel production also increased in the past two weeks.
Traders are looking for ways to increase steel exports to offset losses on shipments sold in the domestic market.
Therefore, they are offering competitive prices to export markets. The increased focus on overseas sales has led to renewed concern about the possibility of an export tax, previously proposed in 2021 but never implemented.
However, with many foreign customers scrambling to find alternative sources of Russian and Ukrainian steel, they may be willing to take the risk of their materials incurring this fee.
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