Wavering Steel Consumption in China Drags Hydrochloric Acid Prices

Hydrochloric Acid (HCl) prices have remained highly volatile in China throughout Q4 2021 due to the hovering concerns of dull demand of steel due to the extended dept crises in the construction sector. Property sector in China has emerged as a downside risk to the overall steel demand for the nation. Although the demand fundamentals of HCl have been firm from segments like cleaning chemicals and chemical intermediates, but it has not been enough to offset the dullness from the major consuming steel sector.

With neighbouring nations like India reducing the curbs on steel imports from China, the nation has been leveraged to fetch prominent revenue from the exports. However, the suspension of CVD from Indonesia and China has not served well for the Indian MSME producers. Many of them were heard shutting their shops as they could not compete with the prices of highly subsidized stainless steel from these two nations.

As per experts, steel demand from China is expected to revive from the developments been made in green economy and decarbonization projects. Despite of various plants going off stream, China’s steel sector has witnessed a surge by nearly 1.2% in its values added output in 2021. As the demand for steel remained strong till Q3 end, Hydrochloric Acid values reached record high in October. However, prices turned bleak with the nation’s property crises and have continued to fluctuate in the same range since then.  As per ChemAnalyst database, HCl prices have again dived by nearly 8% in the current week due to the bearish buying momentum on the nation.

ChemAnalyst predicts that “China’s long term steel demand is likely to retain the upward trajectory in the long run however the nation’s property dept is likely to limit steel offtakes in the near term. As HCl consumption is majorly in line with steel output, its prices are also likely to trace a similar trajectory in the coming timeframe.”