China: Construction sector in best mood in 12 years
China: Construction sector in best mood in 12 years

3 April 2023 – The Economy in China is gaining momentum. This is not only shown by the relevant indices, but also by the Chinese construction industry, which is considered an important factor for steel and stainless steel demand. Nickel prices in Asia are rising by more than 3%. Bad mood in the European steel market or all just false flag?

China: Economy and housing purchases pick up significantly

The important Chinese Purchasing Managers’ Index (NBS) rose to a record high of 57 points in March, and the index for the manufacturing sector in China also improved steadily over the past twelve months. Sentiment among service providers and in the construction sector, on the other hand, rose to a twelve-year high, as reported by Deutsche Bank today.

Recovery to gain further momentum in 2nd quarter

Moreover, Beijing’s massive investments in infrastructure and the real estate sector are gradually bearing fruit. The recovery should gain further momentum in the second quarter. China’s industrial companies and their share prices should also increasingly benefit from this.

China: Housing purchases pick up strongly

In China, the transaction volume for new flats rose from plus 25 to 43 percent year-on-year between the eighth and twelfth calendar week, while that for second-hand flats increased from plus 72 to 154 percent. For both segments, it was about six and 46 percent above the level of the eighth calendar week, respectively. On the other hand, the housing stock has fallen by 2.6 percent since the beginning of the year – which means that it will be used up in less than 24 months at the current level of demand.

Financing of construction projects to be further simplified

In addition, the central bank and the banking and insurance supervisory authorities have presented 17 measures to make it easier to finance construction projects for rental housing. This should accelerate rental housing construction and boost the construction sector, which is important for the economy. The real estate sector and the economy should therefore continue their recovery.

Asian nickel prices up over 3.3%

Nickel prices on the SHFE rose sharply on Monday, gaining more than 3.3% in some cases. With regard to nickel pig iron (NPI) and stainless steel scrap prices in China, manufacturers’ demand for stainless steel scrap is currently expected to increase further due to cost concerns, thus further reducing the availability of scrap. According to media reports from China, many scrap dealers seem to have very low stocks at present.

When market trends for Europe are presented by people from outside the market

When people from outside the market or so-called experts comment on developments in the European market at conferences in Germany, but have no knowledge of the day-to-day business in reality, then you have to ask yourself what they are trying to achieve or who might have paid for it.

Italian steel market in good mood

While stainless steel buyers in Central Europe are being put in a bad mood by various parties (see above) in order to stay in the valley of tears, the stainless steel market in Italy has picked up considerably, especially with regard to the automotive sector, its supplier industry and also for the important indicator white goods. Carbon steel is also reported with prices and growth rates in the mid double digits.

Green Steel already sold out?

It is hardly surprising that Green Steel is expected to be sold out for years by the car manufacturers. After all, there are not even sufficient production capacities for it yet. Or renewable energies, or DRI plants for the BOF/BF route, or green hydrogen.

At the same time, it is one of the easiest measures for the automotive industry to reduce its Scope 3 emissions. Steel will remain an important part of every vehicle even with the Green Transformation.

Surprise: EAF route already exhausted?

A funny fun fact is that what we have been postulating for years has now apparently also arrived on the “big” stage. The EAF route is exhausted. The EU benchmark values already leave the gap for high shares of scrap to even reach the free allocation of ETS allowances for the EAF route. Technological breakthroughs aside, which haven’t happened for years, there’s not much left in the EAF except green power and a high mountain of scrap metal. Did anyone say EU Waste Shipment Regulation?

German BOF/BF mills don’t want EAF

But be careful: this is also about billions in subsidies for the German steel industry, which still produces most of its steel using the BOF/BF route and, together with its lobby organisation WV Stahl, has already persuaded the scientific advisory board of the German Federal Ministry of Economics and Climate Protection, and thus probably also Federal Economics Minister Robert Habeck, to classify the electric arc furnace as not worthy of support.

However, we could have been named as a source here, couldn’t we?

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