Steel inventory is slowly piling up in their warehouses as demand for steel in China falls amid pandemic lockdowns and crippled construction activity.
— hosts extensive supply chains that stretch from Chinese blast furnaces to overseas iron ore mines in Australia and Brazil, the biggest suppliers of iron ore to China.
"The year-on-year decline in steel demand was much greater than that of crude steel production. In that case, steel mills are indeed struggling ," she said.Consequently, inventory levels are 12% higher compared with last year and may take nearly two months to fall to the median levels of the past five years, assuming steel demand roars back to life, said Richard Lu, steel research analyst at CRU Group.
After a much-awaited opening of Shanghai in early June after new cases were recorded for both Beijing and Shanghai, China started re-imposing some restrictions. "We believe that these operators are also producing larger quantities of Semi Finished Steel products so as not to crush finished Steel prices with inflated inventories."
"So, they will keep producing steel because they have to pay wages and maintain other cash flows. Many producers can probably last two years without making money. Many people on the outside [of China] don't understand this resilience," he said.
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