Have steel production margins in China bottomed?

Have steel production margins in China bottomed? Since peaking in Sep’21, margins have experienced a dead-cat bounce in 2023 before reaching a trough in Dec’23.

There are several hints suggesting the year of the Dragon will coincide with a new steel cycle. Whilst the periodicity of the margins and short-term technical analysis on steel prices points at near-term improvements, there are also lower-frequency signals. For example, the multiplication of M&A and assets (temporary-)closure across the globe in 2H’23, or the accumulation of greenfield iron ore mining projects are also supporting structural margins improvement going forward.

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