Moody's latest report on steelmakers in China, "Softening Demand, Increased Inventory Will Weigh on Prices and Reduce 2017 Earnings".
- Earnings of Chinese steel companies will likely weaken in 2017
- Primarily because of a slight weakening of domestic demand amid continued excess capacity and a build-up of steel inventory early in the year
- "These factors will together depress steel prices, which have reached a four-year high, while elevated raw material prices and reduced exports will also weigh on the earnings of producers"
- "Domestic steel consumption will decline as property investment, the largest driver of local steel demand, will likely slow this year following the government's tightening of policy in an effort to curb property-price growth"
- "Auto sales, and subsequently production, will also slow owing to a reduced tax break on small-vehicle sales. However, these pressures will be lessened by government-led infrastructure investment, which will remain robust"
