Growth in steel demand in China is expected to slow in near future and prices will fluctuate in response to the gloomy global economy, the China Iron & Steel Association
(CISA) said on Tuesday in its monthly report.
"Steel oversupply will hardly improve as steel output remains high amid slowing growth of steel-consuming sectors and growing difficulties in steel exports," CISA said.
This is in line with CISA's repeated forecasts that China's steel output growth is likely to decelerate in the second half in line with slowing economic growth.
With the government's efforts to fend off inflation, China will keep its tight monetary policy, which will continue to weigh on demand from steel-consuming users.
In the 26 major cities monitored by CISA, total inventories of five main steel products -- rebar, wire rod, hot-rolled coil, cold-rolled coil and plate -- fell 10,000 tonnes to 13.84 million tonnes in August from the previous month, the sixth consecutive monthly fall.
Inventories rose 1.48 percent to 14.04 million tonnes by the second week of September from the end of August, CISA said. That underscored the slower growth in steel consumption by the world's top steel producer and consumer as buyers remain worried over the global economic uncertainties.
CISA stressed that costs for raw materials, financing and labour have been surging, largely eating into big steelmakers' profits.