China's construction steel prices to recover in Sep'24

Mysteel Global: Chinese prices of construction steel, including rebar and wire rod, are likely to rebound in September 2024, backed by the seasonal pick-up in demand, Mysteel predicts in its latest monthly report.

Bearish market sentiment last month led Chinese construction steel prices to slump during early and mid-August. Subsequently, prices rebounded moderately due to an improvement in supply-demand fundamentals, according to the report.

By the end of August, China's national price of HRB400E 20 mm dia rebar, a weathervane of the country's steel market dynamics, was assessed by Mysteel at RMB 3,337/tonne (t) ($470/t), including 13% VAT, lower by RMB 44/t from the end of July.

Last month, heavy margin losses and the imminent introduction of new rebar standards prompted steelmakers to scale back their production further.

In the last week of August, production of rebars by the 137 mills nationwide under Mysteel's tracking touched 1.62 million tonnes (mnt), falling by 354,900 t m-o-m and by 964,700 t from the same week last year.

The report estimated that construction steel output across China will rise this month, though steel producers will stay fairly cautious when resuming operations. Parallelly, the domestic steel market may see an ease in the impact of the high temperatures and persistent rainfall, which was palpably evident in August, and demand from end-users may improve.

This means that both supply and demand of construction steel will show signs of recovery during September, However, there is a need to prevent any overly rapid climb in production from having adverse effects on the steel market, the report warned.

Inventories of construction steel products at commercial warehouses across the country may continue to trend downward during early and mid-September, which will steadily ease the market pressure. In addition, stocks of old-standard rebar held by traders in most regions will likely be digested no later than mid-September.

By the end of August, total stocks of rebar and wire rods held by the 184 steelmakers and trading warehouses in 35 cities under Mysteel's coverage thinned by 1.8 mnt m-o-m and 2 mnt y-o-y to reach 7.2 mnt.

Note: This has been written in accordance with an article exchange agreement between Mysteel Global and BigMint.