CISA issued research report on July 25th claiming that contradiction between supply and demand will be more prominent and steel prices will present vibrating move in following period.

In H2 of the year, fixed asset investment will still be strong, keeping a rapid growth with construction of farmland water conservancy facilities and affordable housing being the key projects. Despite contraction of overseas demand, the improvement of exporting products competitiveness and products structure still lead to the steady growth in import and export.

Consumption is believed to grow due to rising threshold of tax exemption increasing retirement income and reform of performance pay in institutional organization. In overall, economic development will keep a steady and rapid speed in H2 of the year bolstering steel demand in domestic steel market.

However, the YoY growth of crude steel output in H2 of the year may keep rising as crude steel output in H2 of last year showed MoM decline. Furthermore, economic development in main economies like Europe, US Japan and ASEAN remained sluggish pulling down demand on international market estimating steel prices to move down. Therefore China steel export may eye a decline in H2 of the year.

Under the situation of oversupply, longs may see a better outlook due to construction of affordable housing and farmland water conservancy facilities while plate and strip may eye a blurring outlook.

(Sourced from MySteel.net)
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