China Steel_ China Steel and Iron Ore Weekly Update

Summary of the Conference Call on China Steel and Iron Ore Industry Industry Overview - The conference call focused on the China Steel and Iron Ore industry, providing insights into consumption trends, inventory levels, and production rates. Key Points Steel Consumption Trends - Apparent consumption of rebar continued to decline, while consumption of flat products remained relatively high [1] - Downstream consumption for rebar fell further by 10% week-over-week (WoW), attributed to holidays and the upcoming Chinese New Year [2] Inventory Levels - Steel inventory at traders increased by 75,000 tons (kt), or 1.0% WoW, while inventory for long products rose by 2.9% WoW. Conversely, inventory for flat products decreased by 0.4% WoW [2] - Steel inventory at mills was reported at 3,491 kt, down 0.3% WoW [2] - Iron ore inventory at small and medium-sized mills increased by 9.9 kt, or 4.7%, from the previous week [3] - Inventory at ports decreased by 0.6% WoW, totaling 142.9 million tons (mt) [3] Production Rates - The utilization rate of 247 mills dropped by 0.58 percentage points (ppts) WoW, reaching 85.6% [4] - Average daily output for long products decreased by 3.5% WoW, totaling 2.89 million tons (mnt), while output for flat products dropped by 0.6% WoW, totaling 5.41 mnt [4] - The iron ore operating rate at 126 sample mines was 60.9%, down 3.2 ppts compared to two weeks prior, with an average daily output of 383.9 kt, down 5.0% [3] Market Dynamics - The steel demand outlook remains cautious, with the industry facing challenges due to seasonal factors and inventory adjustments [6] - The CISA (China Iron and Steel Association) reported that member mills' production was 1.98 million tons per day for mid-December, down 2.3% from the preceding 10 days but up 2.5% year-over-year (YoY) [4] Additional Insights - The EAF (Electric Arc Furnace) capacity utilization rate decreased by 0.34 ppts WoW, reaching 52.45% as of December 27 [4] - The overall sentiment in the industry remains attractive, indicating potential for recovery in the medium to long term [6] Conclusion - The China Steel and Iron Ore industry is currently experiencing a decline in rebar consumption and mixed inventory trends, with production rates also showing a downward trajectory. Seasonal factors and market dynamics are influencing these trends, but the long-term outlook remains cautiously optimistic.