Shanghai Steel Prices Fall to One-Month Low on Demand Concer
Mr.Levit, the strategist who reported on economicacalendar.com that Shanghai Steel Prices Fall to One-Month Low on Demand Concer.
Steel prices in Shanghai came under some pressure this week, and on Wednesday fell to a one-month low on the expectations that demand for the metal will decrease due to a seasonal slowdown in construction activity.
Even after losses this week, steel prices in China remain up 40% this year. Prices were driven higher as China moved to stimulate its economy by increasing building, while the country’s pledge and action to decrease the steel market’s overcapacity added extra impetus to the upside. China has promised to cut steel capacity by 45 million tons in 2016, and these capacity cuts accelerated in July and August ahead of the G20 meeting as China, the host country, surely wants to make a good impression with international leaders.
China steel industry’s overcapacity has created trade tensions with many other countries. Recently, the US imposed duties on Chinese steel exports. In addition, China is trimming back output in many pollution-emitting sectors, including the steel market, in order to meet promises it has made to trim its emissions. With the steel industry dealing with overcapacity, it is a good place to reduce pollution.
The pace of China’s steel cuts have been met with some scrutiny, with critics pointing toward the rapid ramp up of cuts in the summer ahead of the G20. After the pace of cuts during the first five months of the year put the country behind at achieving its year-end capacity cut goal, the critique is the ramp up was all show ahead of the G20. No doubt, China steel sector’s overcapacity will likely be one of the main topics of discussion at the upcoming G20.