Steel Producers Make a Loss in China

Iron ore futures prices in China tumbled more than 10 percent in Dalian and more than 7 percent in Singapore amid growing concerns about a sharp decline in steel use in the country.

China has become pessimistic due to the uncontrollable Covid-19 epidemic, the slowdown of the rains in the construction sector, the increase in stocks due to low demand and the low profitability of the factories. The metal used in steelmaking tumbled almost 20 percent, bringing its decline to the eighth day. Again, metallurgical coal prices used in steel production have decreased by 9 percent since February. An index of steel profits in China has slumped around 90 percent so far this month. Wei Ying, Iron Analyst at China Industrial Futures, said, “Steel production rates have dropped drastically as more steelmakers lose money due to lower spot trade and put scheduled maintenance ahead. However, considering the speed of the decline, it is possible that the iron was sold below its value and that there will be a recovery in the second half.” Wei underlined that daily spot trade in construction related steel products is between 11 and 13 million tons, but this figure is usually around 17-19 million tons.