Posted on 05 Jun 2024
Chinese prices of construction steel including rebar and wire rod are likely to lose ground at the beginning of June before showing signs of a rebound later, with the imbalance between demand and supply improving, Mysteel predicts in its latest monthly report.
During May, domestic prices of construction steel items had trended upwards initially before subsequently retreating as market optimism ebbed away with the pace of the decline in steel stocks slowing rapidly towards the end of last month, the report noted. The faster-than-expected fall in demand was blamed.
As of May 31, China's national price of HRB400E 20mm dia rebar, a bellwether of the steel market sentiment across the country, was assessed by Mysteel at Yuan 3,830/tonne ($529/t) and including the 13% VAT, lower by Yuan 69/t from the peak on May 22. On a monthly basis, though, this price still logged a Yuan 16/t gain from April 30.
Last month, construction steel output across the country increased significantly as mills cranked up production after their profit margins on steel sales had improved, according to the report. The output growth among integrated mills outpaced that of mini-mills too, it noted.
By end-May, weekly output of rebars among the 137 Chinese steelmakers Mysteel follows reached 2.39 million tonnes, rising by 76,800 tonnes on month though still down by 339,400 tonnes on year. For wire rod, the total output among the 92 mills Mysteel checks came in at 951,900 tonnes over the same period, up 72,600 tonnes on month but down 91,500 tonnes on year.
China's construction steel production is forecast to decline modestly this month as mills will act cautiously about further ramping up output, due to the slowdown in destocking of their inventories. Rebar output among the 137 sampled mills may waver at 2.35-2.4 million tonnes/week this month, Mysteel estimated.
Whether construction steel inventories will start to accumulate this month is not clear, the report warned, noting only that the stocks will hover at low levels. "Retail steel stocks are likely keep falling due to low steel supplies arriving at the market," it said, advising that demand be closely monitored to see whether it remains depressed.
According to the report, trading activities in the spot market gradually weakened during May, with all seven regions across the country posting large on-month slides in their spot steel sales. The daily trading volume of long steel items comprising rebar, wire rod and bar-in-coil among the 237 trading houses Mysteel monitors nationwide slumped by 12.2% on month or down 15.2% on year to average 132,811 tonnes/day last month.
Source:Mysteel Global
