Prices for some iron and steel products in China actually fell in 2017 while the majority were rising, Kallanish notes.

Domestic prices for colour-coated flat steel, stainless steel flats and Australia-origin iron ore had fallen by the end of 2017 compared with the beginning of the year. The price decrease ranged between -2.97% to -15.75%, while prices for most other steel products surged by over 20%, according to a popular public price index.

Most prices for steel products rose sharply because of the so-called mislabelled steel capacity closures and steel production restrictions. The over-supply in ferrous scrap caused by the removal of illegal induction furnaces also directly influenced iron ore demand. The market price for iron ore slumped from CNY 631/tonne ($99.36/t) to CNY 531/t during the course of 2017.

The steel capacity closures and production restrictions were mainly aimed at carbon steelmaking capacity and mislabelled steel. With relatively stable, but still over-supplied, domestic capacity for colour-coated steel, increasing trade barriers and cooling demand from major export markets. Chinese colour-coated steel prices dipped by around -3% during 2017.

Compared to carbon steel, Chinese stainless steel producers were less influenced by industrial capacity elimination but more so by fluctuations in raw material values. Domestic stainless flat steel average prices therefore fell by -7.14% over 2017.