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Chinese steel production cuts and a surprising improvement in steel demand (up 1% month-on-month in August 2021) helped reduce steel exports month-on-month in August 2021.
Steel fared better than aluminium; aluminium witnessed ~ 4.5% month-on-month increase in exports in August 2021.
The demand lead indicators are still weak leaving the steel price resurrection story in H2 CY21 dependent on the intensity of production cuts.
Chinese steel profitability has declined further on the back of increasing coking coal prices.
Further, Chinese environment ministry has released the draft notice on FY22 heating season iron and steel production restrictions for consultations.
Each day the correction in steel prices gets postponed, deleveraging adds to fair value for listed steel equities.
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