Posted on 25 Sep 2024
As China's National Day holiday spanning October 1-7 approaches, Chinese users of long steel items such as rebars and beams are adopting differing stances towards stockpiling for holiday use, with many opting to delay replenishment despite planning to maintain construction activities during the break, according to Mysteel's latest survey.
The weeklong holiday traditionally prompts domestic steel traders to temporarily exit the market for celebrations, Mysteel Global notes. As a result, steel end-users intending to continue operations over the holiday period commonly build their steel inventories beforehand because buying during the break may not be possible. And in any case, logistics firms will generally be holidaying too, so deliveries could be disrupted.
Among the 35 end-users engaged in housing or infrastructure construction across China that Mysteel sampled, 21 or 60% expressed interest in pre-holiday stockpiling, while 14 or 40% indicated they have no such plans.
Of the 21 building contractors proactive in restocking, 16 intend to commence stockpiling within one to four days preceding the holiday, highlighting a tendency among user enterprises to acquire materials closer to the holiday period.
All 35 end-users affirmed their commitment to maintaining construction site operations during the holiday, with 27 reporting similar working days compared to the previous year, while six anticipate shorter operational periods.
Regarding post-holiday expectations, 25 companies said they anticipate stable domestic steel prices, while an equal split of five respondents each held bullish and bearish views, according to the survey.
Considering the recent 50-basis-point interest rate cut by the U.S. Federal Reserve, there has been a slight rebound in China's rebar prices, the survey results suggested. However, the domestic property market remains sluggish, and as support from infrastructure projects appears subdued, so overall steel demand remains tepid, the survey highlighted.
Currently, as domestic steel mills are enjoying improved profitability from steel sales, the temptation will be to lift production, which in turn will add pressure on the supply side, Mysteel Global observed. Coupled with the subdued demand, this situation may potentially lead to post-holiday declines in steel prices.
As of September 23, China's national price of HRB400E 20mm dia rebar, a barometer of the spot steel market sentiment, was assessed by Mysteel at Yuan 3,361/tonne ($478/t) and including the 13% VAT.
Source:Mysteel Global
