China steel prices show an upsurge after the covid-19 pandemic

As of July 2022, the steel price in China is at 4029.26 Yuan/MT. China has a well-established construction industry. Back in 2019, they were able to reach their peak at 24.84 trillion Yuan. Every year, China comes up with plans to make the industry smarter, greener and safer. They have recently established a five-year development plan that aims to adapt to the constant changes that the sector is currently experiencing which includes cutting carbon and adopting digital technologies while also improving site safety and quality of buildings. This plan runs up to 2025 but as per the Ministry of Housing and Urban-Rural Development, they can add more by 2035. They will make further advancements in the production of building components and maintenance.

The Chinese government has a consistent record of improving the country’s productivity. Infrastructure development is continuously helping the economy by regulating demand through the Belt and Road initiative. As of now, they want to be able to create a housing market in 40 cities with 6.5 million affordable rental units. Furthermore, the 219,000 old urban communities built before 2000 would be modernized as well.

Steel price prediction

Steel prices as of now is relatively high after reaching its all-time low during the COVID-19 pandemic and the conflict between Russia and Ukraine. The global market obviously weakened because of the spiralling inflation. Furthermore, Geopolitical instability definitely affects the steel market uncertainty. Property sales fell and it resulted to a decrease of steel consumption in China since it is often used in building properties.

On the other hand, steel output from countries that are greatly affected by the conflict of Russia and Ukraine fell by 34.5% in May 2021 compared to May 2020. One thing that Chinese economists and investors say is the fact that the Chinese steel demand will be able to bounce back after the lockdowns. According to Fitch Ratings, an Industry analyst, China is expected to recover quite strongly in the second quarter of 2022 once the lockdowns are lifted and COVID-19 infections are stabilized. Day-by-day, the curve is flattening. The demand for Chinese steel is expected to further increase by 2022.

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Moreover, the price of other raw materials are still expected to remain high because of geopolitical issues and state-mandated measures to lessen our carbon footprint. According to experts, growth is still growth. No matter how slow or small the movement is in the current market, it is still better than a recession.

Of course, it is still best to keep your eyes open and monitor the charts for Steel prices since the long-term trend has been down since June 1. The Intermediate-term has been down since April 11. On the positive side, the short-term trend increased since July 25 according to an analysis.

Steel is definitely still a good investment especially when you aim for a great base for construction. You should still do your own research and never invest money that you cannot afford to lose. Investing is still a personal decision that you should make based on your needs, capabilities and how the market is currently performing. Always keep in mind that past performances is not a guarantee of future returns.

China’s GDP

China’s Gross Domestic Product grew by 2.5 per cent in the first half of 2022. According to economists, their country’s GDP is generally high and there are two factors that may be the cause of the rapid economic growth. First is the large-scale capital investment which is financed by large domestic savings and foreign investment. Second is the rapid productivity growth in the country. However, China is still not yet considered to be a developed country even when it has the second largest economy in the world.

Since the construction sector plays a vital role in GDP with a percentage of 25.7%, steel prices are slowly increasing in their country. This steel price increase will help with the economic conditions that the country is currently facing as of now. Construction and development is obviously reduced since it is mandatory to stay at home because of the rising Coronavirus or COVID-19 infections.

The said virus has greatly affected the lives of people from all over the globe. Businesses, schools and other establishments were forced to shut down and follow the safety health protocols that the World Health Organization or WHO implemented back in March 11 of 2020. Moreover, China has definitely recovered from this depression. Their confidence and business activity has definitely improved since then because China has always had an attitude to aim for better construction, infrastructure, and developments. They also use steel for machineries that are widely-known since China has a lot of factories and manufacturers that produce goods for companies from all over the globe. A lot of these companies are actually pretty dependent to China that is the reason why the Chinese government aims to make steel production less harmful to the Earth and to us human beings as well.

Top steel companies and producers in the World

The top three steel-producing countries in the World are China with 1,032.8 Mt, India with 118.1 Mt, and Japan with 96.3 Mt. China became the first country to produce over one billion. China’s steel production rapidly increased over the past few years alongside their economy that was industrialized and urbanized. China has always been a great consumer of raw materials such as iron ore and coking coal, one of the reasons why their steel production creates a balance in the international market and their economy as well.

There are a lot of steel companies in China hence it being the world’s top producers of steel. Hebei Iron and Steel with over 40.2 Mt, Baosteel Group with over 38.9 Mt, and Wuhan Iron and Steel with 30.3 Mt. Hebei is based in the Hebei province and it has been China’s biggest steel producer since 2009. They have partnered up with a lot of different countries over the past couple of years.