Posted on 25 Aug 2020
The upsurge in construction of 5G base stations across China has been giving support to steel demand, especially that for thick-gauge hot-rolled coils (HRC), market sources told Mysteel Global. The establishment of the 5G network has been gaining speed, with 5G towers being installed one after another across the country, especially in larger and more wealthy urban centres, they noted.
Recently, China has been building an average of around 15,000 5G towers per week, according to Wen Ku, a spokesman for the Ministry of Industry and Information Technology quoted by China’s official media Xinhua News. As of the end of June, over 400,000 5G towers had been installed nationwide, according to another Xinhua post.
China Mobile, a major telecommunication service provider, raised its target for 5G tower installation this year to 300,000 – from 250,000 previously – while China Unicom aims to have 370,000 in place by year’s end, the second post stated.
An official from a steel mill in East China said that sales of 8-14mm HRC were “pretty good”, thanks to the construction of 5G towers. “This year, we’re selling our thick gauge hot coil at a higher price than thin gauge, which is abnormal,” he told Mysteel Global.
The average height of a 5G cell tower is 50 metres, with the tower itself consisting of welded heavy-gauge HRC and requiring at least a tonne of steel, according to him. Thanks to such orders, the margin his company is earning on its HRC has risen from Yuan 330/tonne ($47.8/t) last month to Yuan 485/t now, and “it is still rising,” he said.
A 5G cell tower Source: Online
As of August 20, price of Q235B 13.5*1,500mm HRC in Shanghai was at Yuan 4,190/tonne including the 13% VAT, Yuan 70/t higher than local price of Q235B 2.75*1500mm, while a year ago, both were at Yuan 3,850/t, according to Mysteel’s database.
“Building 5G networks is really a trend in China now,” another official from a steel mill based in Central China commented, saying that his company is in discussions with local telecommunication companies on supplying steel products for local 5G projects.
Yet market pundits quizzed by Mysteel Global generally believed that while the frenetic construction of new infrastructure including 5G base stations in China may provide support to steel demand, it will not be as large a driver of demand as traditional public works projects such as roads and bridges.
“It’s true that new infrastructure could be a ‘new spotlight’, guiding us steel traders to explore innovative demand and customers,” a steel trader based in Shanghai commented. “But the steel usage is comparatively small and the construction period could be very long... (We) should not expect the ‘new infrastructure’ to propel prices high.”
Chinese steel market experts estimate that steel consumed in new infrastructure construction this year may be in the 25-33 million tonnes range, and while not insubstantial, it pales when the country’s overall steel consumption is around 900 million tonnes, Mysteel Global notes.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
