Posted on 08 Aug 2023
Domestic prices of construction steel comprising rebar and wire rod across China may still have room to increase this month, with the market fundamentals improving further and steel mills' production costs firming, Mysteel forecasts in its latest monthly report. Prices in the second half of this month will be significantly higher than those seen in the first half, it predicts.
During July, Chinese construction steel prices had lost ground initially before subsequently trending upwards, thanks to better market sentiment after the central government introduced policies for the real estate sector that lifted steel industry hopes, the report noted.
For example, the country's national price of HRB400E 20mm dia rebar, under Mysteel's assessment, had swelled by Yuan 31/tonne ($4.3/t) from the end of June to reach Yuan 3,886/t including the 13% VAT as of July 31, marking a two-month rise.
China's construction steel production is forecast to steadily decline in August, as steelmakers have less enthusiasm for ramping up output due to unstable profit margins, according to the report.
Meanwhile, the country's commitment to reach carbon emission peak by 2030 and carbon neutral by 2060 will require the steel sector to control output, the report noted. Chinese steelmakers may be under greater pressure to curtail production during this quarter as their output in the same period last year had declined fast.
By end-July, weekly output of rebar among the 137 mills nationwide Mysteel tracks fell 23,900 tonnes on month to 2.74 million tonnes, though the volume was higher by a large 417,500 tonnes on year, according to the data.
Last month, construction steel inventories mounted at a slower pace than market participants had expected, and for August, the accumulation of stocks may remain limited, the report suggested.
The total inventories of rebar and wire rod held by the 184 steelmakers and at trading warehouses in the 35 cities Mysteel tracks touched 9.1 million tonnes by the end of July, growing by 227,200 tonnes on month though slumping by 1.8 million tonnes on year, Mysteel's data indicated.
As for China's consumption of construction steel during July, the daily trading volume of rebar, wire rod and bar-in-coil among the 237 trading houses under Mysteel's tracking averaged 149,972 tonnes/day last month, down 3.1% on month or lower by 2.7% on year.
The report showed that construction steel demand in all regions except Northwest China posted on-week declines. Within the total, spot sales in Northeast China's decreased the most, falling by 15.1% on month to average 3,713 t/d in July, while the volume in Northwest China saw an uptick of 0.7% on month to 5,395 t/d.
Source:Mysteel Global
