Demand for steel in China continues to strengthen, according to Macquarie’s April steel survey of Chinese steel mills, on increase infrastructure and construction activity.
“Sentiment among steel mills rose sharply and is now at its highest level since early 2013,” Macquarie said in a recent note. “With profitability also rising to the highest level in history, capacity utilization has further recovered but still [remains] below the level seen in 1H14.”
The strong positive sentiment among respondent mills also carried over into demand for raw materials. With profitability running at a historical level, expectations of further production ramp up were strong among mills, which means mills should continue to have good appetite for raw material restocking.”
According to Macquarie’s survey, the willingness of Chinese steel mills to buy metallurgical coal and iron ore climbed to its highest level in history – although a concurrent restart in iron ore supply will cap the upside to prices in the near term.
Seaborne supply of iron ore into China picked up from Sierre Leone – which re-appeared in China’s iron ore import data in January for the first time since May last year – and India, according to Chinese customs data through February, while Australian exports picked up in March with Port Hedland shipping 39.5 million t in March – a record high.
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