Sobering China Trip - steel demand has peaked

Mark Pervan Head of Commodity Research at ANZ has just returned from a China trip visiting steel mills and traders – “and the consistent view is that steel demand has peaked. Most concerns revolve around the weak real estate market…Slower than pledged infrastructure spending was also becoming a drag. Related to that, there was general scepticism over the effectiveness of government stimulus. The view is that there is more than enough steel capacity to meet current and future demand. In fact, they expect steel output to fall this year for the first time since 1980... Overall production levels remain well above demand - with highly indebted steel mills running at full capacity to pay loans. This has been, and will continue to be in the short term, a headwind for steel and iron ore prices”. To read the full article click the (VIEW LINK)