Posted on 06 Mar 2024
Chinese prices of construction steel including rebar and wire rod are likely to move up this month, backed by the possible emergence of destocking, Mysteel predicts in its latest monthly report. Domestic mills' margins on selling these steel products may also expand this month, the report suggests.
During February, domestic prices of construction steel products experienced minimal fluctuations before the Chinese New Year holiday commenced on February 10, but prices started to lose ground after the eight-day holiday break. The slower-than-expected recovery in demand from end-users was blamed, according to the report.
As of February 29, the country's national price of HRB400E 20mm dia rebar, a bellwether of domestic steel market sentiment, had lost some Yuan 57/tonne ($7.9/t) from the end-January to hit a 3.5-month low of Yuan 3,983/t including the 13% VAT, according to Mysteel's assessment.
Chinese steelmakers were cautious about cranking up their production after the holiday, the report noted. By end-February, weekly output of rebar among the 137 steelmakers under Mysteel's nationwide survey averaged 2.1 million tonnes, lower by 54,100 tonnes from the previous month, the data showed.
The report estimated that during this month, weekly rebar output among the 137 surveyed mills may gradually rise to 2.5-2.6 million tonnes, far lower than the same period last year.
On the other hand, total inventories of rebar and wire rod grew substantially last month, largely due to the market being in holiday mode, but the pace of stocks accumulation was slower than last year due to the lower steel output, the report said.
By the end of February, the stocks of rebar and wire rod held by the 184 steelmakers and at trading warehouses in the 35 cities both under Mysteel's tracking added up to 15.6 million tonnes, higher by 6.3 million tonnes on month though down 88,600 tonnes on year.
Construction steel inventories are forecast to trend downwards from the second week of March, and the pace of the decline in stocks may quicken afterwards, according to the report.
Meanwhile during February, the daily trading volume of rebar, wire rod and bar-in-coil among the 237 trading houses Mysteel checks averaged a mere 48,572 tonnes/day, slumping by 51.8% on month, Mysteel's data showed, as spot trading came to a standstill due to the holiday.
Source:Mysteel Global
