Posted on 06 Feb 2024
China's domestic prices of construction steel with rebar as a core product are likely to bounce back after the conclusion of the Chinese New Year (CNY) holiday, according to Mysteel's monthly market outlook report. The imbalance in long steel demand and production can hardly arise, while steelmakers' profit margins on steel sales may improve, the report predicts.
Chinese construction steel prices had been narrowly rangebound in January with actual demand from end-users shrinking and the spot trading gradually coming to a lull.
As of January 31, China's national price of HRB400E 20mm dia rebar, a weathervane of the country's steel-market dynamics, had lost by Yuan 34/tonne ($4.7/t) from the end of last December to reach Yuan 4,040/t including the 13% VAT, according to Mysteel's assessment.
Many mini-mills across China halted their operations last month for the early celebration of the CNY holiday, while integrated mills also saw their operational rates decline, the report notes.
By end-January, the weekly output of rebar among the 137 steelmakers nationwide Mysteel monitors stood at 2.16 million tonnes, falling by 284,900 tonnes on month or lower by 192,000 tonnes on year, according to Mysteel's data.
The report points out that many domestic steelmakers, especially blast furnace (BF) mills, have been operating at a loss currently, though the losses have narrowed somewhat with slightly reduced production costs.
As of January 31, domestic BF mills still suffered an average loss Yuan 143/t on rebar sales, while electric arc furnace steelmakers managed to earn Yuan 81/t by the same day, Mysteel assessed.
The pace of the recovery in rebar output after the CNY holiday may be slow, which, plus limited on-year increase in inventories, suggests relatively balanced fundamentals for construction steel post-holiday, the report estimates.
Stocks of construction steel products including rebar and wire rod showed a quick accumulation last month due to the weakening in demand and winter restocking among traders, the report said, but the growth in inventories was much lower than that in the previous year, it added.
By the end of January, the stocks of rebar and wire rod at 184 steelmakers and trading warehouses in the 35 cities both under Mysteel's tracking amounted to 9.3 million tonnes, climbing by 1.9 million tonnes on month though plunging by 4.7 million tonnes on year.
Last month, China's spot trading of construction steel decreased due to the seasonal factor, and the transaction volume of rebar, wire rod and bar-in-coil among the 237 trading houses across the country Mysteel checks slumped by 25.2% on month to average 100,786 tonnes/day.
Source:Mysteel Global
