Worst Year for Chinese Steel Mills Since 2016 Gives Way to Hope

China’s steel mills are gearing up for a brighter year as prices of the construction material recover on optimism that an economic rebound and measures to revive the property industry will boost demand.

Steel futures in Shanghai have surged as much as 26% in the past three months on expectations that consumption will expand after the government scrapped Covid-Zero rules, increasing optimism over the outlook for industry profits.

That brings welcome relief for the world’s largest steel industry after a dire year for earnings in 2022. China is now focused on ramping up its mammoth economy, with President Xi Jinping calling this week for enhanced efforts to boost consumption and expand investment. Still, uncertainty remains over the strength of the rebound and how effective the support measures will be.

China’s Growth Recovery Still Patchy Despite Better Outlook

“There’s little doubt that China’s reopening will be a boon for domestic steel consumption in 2023 compared with the disappointing levels” last year, said Atilla Widnell, managing director at Navigate Commodities in Singapore.