Beijing construction steel resumes trade cautiously with price dip

Posted on 11 February 2020

Source: S&P Global Platts

Major construction steel stockists and distributors in Beijing resumed operations Monday, after the city government extended the Lunar New Year holidays by a week until February 9 in a bid to limit the spread of the coronavirus, with prices opening the week a tad lower.

The most active May rebar futures contract on the Shanghai Futures Exchange closed Monday at Yuan 3,305/mt ($473/mt), down Yuan 20/mt, or 0.6% from last Friday. The contract has fluctuated around Yuan 3,310/mt for the last four trading sessions, recovering from a slump that saw prices fall by the daily limit when futures trading resumed February 3.

In the physical market in Beijing, offers fell to Yuan 3,505/mt ex-stock Monday afternoon, down Yuan 25/mt from Platts' assessment last Friday.

Market participants remained on the lookout for developments related to the coronavirus outbreak, with some expecting further news of government support measures, preventing any drastic drop in prices.

Some of the biggest rebar distributors that resumed work include China Railway Construction Engineering Group, Beijing Shougang Xinganglian Trade and Beijing Jiwu Metal Trade, according to notices by the companies seen by S&P Global Platts.

All the companies have put in place measures to prevent the spread of the coronavirus, for example, by limiting the number of staff working in offices, and by requiring customers to provide details of the trucks and their drivers that would be lifting cargoes from stockyards by a few hours in advance, sources at the companies said.

"Spot sales and the loading and lifting of cargoes from the Daxing stockyard have resumed normal operations," the notice by China Railway Construction Engineering said. "Due to precautions put in place, drivers arriving at the stockyard are requested to cooperate with health inspection protocol, put on face masks, and not to alight from their vehicles without being asked to when in the stockyard."

China Railway Construction Engineering's office will be staffed by one person in case of emergencies, while other employees will be working from home, a company source said.

At the Zhonghei stockyard, cargoes may be lifted "normally, but [buyers] are required to notify the stockyard of the truck's vehicle number, driver's name, identification number and contact details four hours in advance of arrival," a source at Beijing Jiwu said.

Other mills and trading companies in the capital city resuming operations Monday have done so with limited staff in the office, with windows open to ensure ventilation and employees wearing masks, other industry sources said.

Rebar inventory levels in Beijing are "high," according to the first source, who estimated it at above 10,000 mt. Inventories may remain elevated as work at construction sites is expected to resume only slowly on measures limiting the gathering and movement of large groups of people.

China's finished steel consumption this February could fall by up to 43 million mt compared to a year without a coronavirus outbreak, due to a slowdown of construction and manufacturing activity, according to an analysis by Platts. 

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