Posted on 06 Apr 2023
The market fundamentals for construction steel items in China comprising rebar and wire rod are likely to remain healthy this month, with demand showing some resilience while the room for output to increase will be limited, according to Mysteel's monthly report.
During April, Chinese steel mills will likely have limited enthusiasm for ramping up steel output due to high production costs and meagre profit margins, the report pointed out, even though steel demand may experience "explosive growth" this month, and overall consumption may remain high.
Rebar production among the 137 Chinese steelmakers Mysteel tracks came in at 3.02 million tonnes over March 23-29, rising by 71,600 tonnes on month, though that of wire rod among the 92 makers Mysteel follows slipped by 3,100 tonnes to 1.3 million tonnes over the same period, the data found.
On the other hand, inventories of construction steel products may continue to empty in April, while the tonnage held by steel mills may continue declining though at a slower pace, according to the report.
As of March 30, rebar stocks at the 137 steel mills and among the traders Mysteel monitors in 35 cities nationwide totalled 10.9 million tonnes, lower by 1.5 million tonnes on month. Similarly, the stocks of wire rod held by the 92 mills and at commercial warehouses in 35 cities Mysteel canvasses fell by 232,300 tonnes on month to 3 million tonnes.
As for spot prices of construction steel, Mysteel suggests that prices may leap high and then fall during April. "Market participants should be wary of the potential risks after steel margins showed signs of widening this month," it also cautioned.
Last month, China's prices of construction steel trended upwards initially on the support of solid fundamentals, before heading down due to the retreat in raw materials prices, Mysteel notes.
Consequently, the country's national price of HRB400E 20mm dia rebar, a barometer of the domestic steel market's health, had declined by Yuan 15/tonne ($2.2/t) on month to Yuan 4,292/t including the 13% VAT as of March 31, according to Mysteel's assessment.
Mysteel's data also showed that spot sales of construction steel including rebar, wire rod and bar-in-coil among the 237 trading houses it quizzes averaged 172,029 tonnes/day for March, climbing by 28% on month or up 2.6% on year. The findings indicate that domestic spot trading has shown a clear improvement with the arrival of spring, usually the peak steel consumption season, Mysteel remarked.
Source:Mysteel Global
