Posted on 01 Aug 2024
Ahead of new rules governing the production and performance of carbon steel rebars that come into force late next month, many Chinese steel mills have already announced higher settlement prices for rebars conforming to the new standards, a Mysteel survey has found.
Even though the new rules don't formally take effect until September 25, many steel firms across China, including some in Southwest China's Sichuan and Yunnan provinces, North China's Shaanxi province, and North China's Shanxi province, have begun telling customers that from August 1 buyers will need to pay about Yuan 30/tonne ($4.15/t) or Yuan 50/t extra for standard grade rebars such as HRB400E, according to Mysteel's tracking.
For example, Shanxi Jianlong Industrial Co, a subsidiary of leading private steelmaker Jianlong Group, is charging Yuan 30/t more for its rebars produced under new standards, Mysteel Global has learned.
In late June, China's State Administration for Market Regulation approved two new mandatory national standards for hot-rolled plain and ribbed rebar, GB1499.1-2024 and GB1499.2-2024 under which rebars are required to meet stricter tolerances regarding production accuracy, fatigue performance, smelting processes and testing methods, as reported.
Raising the quality of the bars also raises the production costs for the mills, however, with Mysteel calculating that the switch to the new rebar standards will add about Yuan 20/t to steelmakers' production costs.
As of July 29, a total of 71 Chinese steel mills had issued notices to customers announcing that they would produce and sell rebar under the new standards, with their respective implementation dates spanning from end-July to mid-August. Within the total, about half of the mills told Mysteel they would be requesting the higher prices immediately from August 1, the survey results showed.
Fearing that their existing rebar stocks would not be totally consumed before the new standards come into effect, many steel mills and traders have been rushing to sell off rebar at lower prices, a scramble that has caused not only prices of rebars to plummet recently but led those of other steel items to soften in sympathy.
In parallel, while the standards upgrade issue reverberates through the industry, some steelmakers have chosen to simply halt production and conduct maintenance rather than suffer losses on any sales they might make this month. By July 31, a total of 38 steel mills across China had unveiled plans for maintenance stoppages during the period from mid-July to end-August, that will take about 3.36 million tonnes of construction steel out of the market, according to Mysteel's tracking.
Source:Mysteel Global
