China steel production ticks up in August

Chinese crude steel production increased by 0.8% YoY and 3.0% MoM in August, according to the National Bureau of Statistics. According to Reuters, Chinese steel inventories continue to decline. Rebar and HRC stocks have both declined by 9.4% and 11.1% MoM to 4.9 MMT and 2.6 MMT, respectively. Across all the major steel products, Chinese inventories have declined by 9% to 12 MMT. This is also 37.6% below the highs for this metric in 2022 back in March. With end-demand for steel continues to be weak amid a struggling property sector, steel prices remain depressed despite the falling inventories. Current SHFE rebar futures prices printed $552/tonne, declining by 5.5% MoM. Earlier today, the PBoC opted not to further ease monetary conditions by keeping all benchmark lending rates as they were, aiming at supporting its declining currency. The current 1-year and 5-year loan prime rates are therefore unchanged at 3.65% and 4.30% respectively.

Chinese grain demand falls in August

China imported 11 MMT of seaborne grain in August, decreasing by 28.2% YoY. The persistent covid-zero restrictions have reduced the country’s demand for food as restaurants across most regions are sporadically locked down. Grain shipments to China on the Panamax and Supramaxes each declined by 24.0% and 50.8% YoY, respectively. More specifically, China imported 6 MMT of Brazilian soybeans on bulk carriers in August, declining by 25.9% YoY. Of the major producers, Australia was the only country to show growth in grain shipments to China, although in minor volumes. China imported 600k tonnes of predominantly wheat from Australia, almost doubling YoY. Despite the Black Sea grain deal helping soften prices in certain grain markets, dry weather across the US and ECSA have capped these declines, keeping China’s demand on the seaborne market subdued.