Posted on 06 Jun 2023
China's prices of construction steel comprising rebar and wire rod stand a chance of bottoming out and then rebounding during June, according to Mysteel's latest monthly report. The price recovery will be driven by firming production costs and hopes that the central government introduces new stimulus policies to lift the domestic steel industry, it said.
Last month, domestic construction steel prices recorded substantial declines due to weakening steelmaking raw materials prices and because bearish sentiment had wreaked havoc on the sector, the report showed.
As of May 31, the country's national price of HRB400E 20mm dia rebar, a barometer of steel-market dynamics, had dived by Yuan 197/tonne ($27.7/t) from the end of April to Yuan 3,680/t including the VAT to hit a new low since May 9 2020, according to Mysteel's assessment.
Output of construction steel may recover slowly and steadily this month, but the room for growth will be limited, the report noted, as domestic steelmakers may still take a cautious stance towards ramping up production – given there is no clear sign that mills' profit margins will enjoy any marked improvement.
During May, many domestic mills had opted to lower their production to reduce risks they might meet, according to the report. On a yearly basis, China's construction steel output was far lower than during the same month last year.
Over May 25-31, rebar output among the 137 steelmakers across China Mysteel regularly surveys inched up by 4,300 tonnes on month to 2.73 million tonnes, though this was lower by 242,100 tonnes on year. Output of wire rod among the 92 makers Mysteel tracks declined by 90,400 tonnes on month to 1.04 million tonnes and was also lower by 361,000 tonnes on year, Mysteel's data found.
The destocking pace of construction steel inventories may continue during June, an off-month for steel consumption, despite the increases in output, the report suggested. However, it also warned that the supply of some items in specific sizes and specifications may tighten, following the excessive stocks digestion.
As of June 1, rebar stocks held by the 184 domestic steel mills and at trading warehouses in the 35 cities Mysteel tracks totalled 8.1 million tonnes, while those of wire rod stood at 1.8 million tonnes, thinning by 1.8 million tonnes and 880,200 tonnes respectively on month, the data showed.
As for consumption of construction steel during May, the daily trading volume of rebar, wire rod and bar-in-coil among the 237 trading houses Mysteel checks averaged 156,699 tonnes/day, lower by 4.2% on month but higher by 1.7% on year. The report pointed out that steel demand in different regions of the country diverged last month, with that in Northwest China marking the largest on-month rise of 15.8%, while the volume in East China fell the most by 7.3% on month.
Source:Mysteel Global
