Posted on 09 Oct 2023
Prices of construction steel comprising rebar and wire rod throughout China are likely to maintain their upward strength in October, with the mismatch between supply and demand likely becoming more pronounced and steel inventories continuing to thin, Mysteel projected in its latest monthly report for the domestic construction steel market. Steel mills' growing production costs will also lend some support to finished steel prices, it said.
Chinese construction steel prices bounced back during September, yet at a slow pace due to a lack of market confidence, the report noted. For example, the national price of HRB400E 20mm dia rebar, a bellwether of the domestic steel market dynamics, had rebounded by Yuan 65/tonne ($8.9/t) on month to Yuan 3,841/t including the 13% VAT as of September 28, according to Mysteel's assessment.
Meanwhile, China's construction steel output showed a disparity last month, with rebar output growing as some mills' rolling lines had been brought back to production, while output of wire rod kept declining, according to the report.
By end-September, the weekly output of rebar among the 137 steelmakers Mysteel follows nationwide rose 47,400 tonnes on week to 2.6 million tonnes, while that of wire rod fell 20,500 tonnes during the same period to 1.1 million tonnes, Mysteel's data showed.
For October, the increase in construction steel production is unlikely to sustain, and steel mills may take the initiative to curtail output due to long-lasting profit losses and also because they may observe authorities' restriction orders to reduce air pollution, the report predicted.
At the end of September, rebar stocks held among the 137 steel mills Mysteel checks hit a low level of 1.7 million tonnes, down 226,600 tonnes on year. "The supply of some rebar items in specific sizes and specifications had tightened in the market as a result of mills' low stocks," the report pointed out.
For China's consumption of construction steel last month, the daily trading volume of rebar, wire rod and bar-in-coil among the 237 trading houses under Mysteel's tracking gained 2.6% on month to 148,530 tonnes/day. The consumed tonnage recorded an on-year decline of 17.5% though.
The on-month rise in spot trading of construction steel was short of market expectations, and the average trading volume was well below the threshold of 200,000 t/d for a robust steel consumption month, mainly dragged by the remaining weakness in the domestic real estate market, according to the report.
Source:Mysteel Global
