Finally, smiles at a steel and iron ore conference in 2016

Looking from afar, the crowds cramming into the Dalian Shangri-La Hotel lobby and conference hall during the 16th China International Steel & Iron Ore Conference on September 21-23 were no different from previous years in numbers, with many still preferring dark blue or black suits and dresses for the occasion.

Looking closely, though, there was nothing dark or gloomy about the atmosphere at the conference venue. Quite the contrary – people chitchatted with smiles and bursts of laughter.

One attendee picked up on the delegates’ good mood, commenting with a smile on his face: “People are definitely feeling more relaxed and enjoying their work much more this year, not many frowns and serious and troubled faces around as last year.”

I’d say this remark was spot on and summed up this year’s CISA conference.

Photo by Hongmei Li

It has come as no surprise that Chinese steel market sources feel a bit more cheerful this year. Since March, the industry has climbed out of the deep hole of lossmaking it had found itself in. Up until September, many of the mills gathered at Dalian enjoyed an average margin of Yuan 100/mt to Yuan 200/mt.

After the cold days China’s steel industry has experienced since 2012 – especially 2015's freezing and shivering winter – industry sources are bone-tired of witnessing continuing slides in steel prices. While the rebound in steel prices may not be permanent, it is being embraced by the whole industry and  is worth cheering while it lasts.

And they will have more to look forward to after sitting in at this year’s conference presentations, as most speakers agreed that China’s steel market will probably stay firm for the last quarter of 2016.

China’s excess steel capacity battle will continue, and steel mills are all cautious with their steel output and unlikely to lift their utilization rates too much.

“The market has been educated the hard way the past few years, and no producer will be blindly operating at high rates if they are running at losses, tight credit and reluctance of the banks to finance also curtail mills’ efforts to produce much more,” an industry source said.

At the same time, no one knows for sure how long the spring will last. Even a senior official from China Iron & Steel Association declined to comment on the market prospect for next year.

“We will have to wait till sometime in Q4 to judge what will be happening next year, but I believe mergers and acquisitions, and industrial consolidation will be a continuing theme in the steel industry,” he said.

Well, that is good enough, as this suggests that steel output will be under watch, and as long as supply is unlikely to surge, prices will be able to take good care of themselves.

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