Morning Bites (part 2)

🔗CISA mills daily crude steel production in early-September rose to 1.924mnt, up 2.1% from the previous ten days, but 7.8% lower YoY. According to the CISA data, local production declined 5.5% YTD (through 10 September). Meanwhile, local steel inventories increased 1.7% over the period, remaining 4.4% higher YoY

Given the ongoing weakness in the global steel market, we believe that Beijing will continue gradually tightening supply. Although the current five-year plan lacks explicit targets for capacity cuts, China could potentially introduce additional strict supply-control measures, similar to the 2016-17 reform (when >100mnt steelmaking capacity was removed) to accelerate market rebalancing, we believe

For instance, Beijing has recently imposed a more stringent steel capacity swap plan to curb oversupply. Per a Ministry of Industry and Information Technology statement, at least 1.5t of old steel capacity must now be decommissioned to build ⁠every 1.0t of new capacity nationwide

#steel