China's construction steel prices to rise in Sept'21 - Mysteel

China's domestic prices of construction steel may stabilize and rebound this month, with both demand and supply growing, according to Mysteel's near-term market outlook report. The growth in demand may outpace that of supply, and stocks of construction steel may decrease further.

As for demand for construction steel, the operational rate of construction projects will increase as September is usually a peak season for steel consumption in China, according to the report. Furthermore, those projects that experienced disruptions due to flooding and the resurgence of COVID-19 cases earlier will likely see work accelerate this month, leading to significant on-month growth in steel demand.

China's production of construction steel will mount moderately during September compared with that in August, as some mills had resumed production starting mid- and late August and their output subsequently increased, the reported showed.

Production of rebar among the 137 Chinese steelmakers Mysteel tracks including integrated mills and re-rollers gained for the third consecutive week over August 19-25, rising by 0.8% or 27,000 tonnes on week to reach 3.27 million tonnes, as reported.

In August, China's domestic spot steel prices experienced sharp declines at the beginning of the month as the market reacted to Beijing's call for stability in supplies and prices of bulk commodities. The country's national price of HRB400E 20mm dia rebar under Mysteel's assessment slumped by Yuan 161/tonne ($24.9/t) on month to Yuan 5,318/t as of August 31.

By August 27, Mysteel's tracking of construction steel stocks including those of rebar and wire rod at the 137 mills and 92 mills respectively amounted to nearly 4.2 million tonnes, or up 166,600 tonnes on month, though the volume was still lower by 386,100 tonnes on year.

Regarding steel stocks at commercial warehouses in the 35 Chinese cities tracked by Mysteel, the volume totalled 9.5 million tonnes as of August 27, down 329,400 tonnes on month or 1.2 million tonnes lower on year.

In August, steelmakers saw their production costs drop thanks to falling iron ore prices, the report found, and steel mills' margins widened moderately.

As of August 31, the average margins that the Chinese blast-furnace steel mills Mysteel canvasses earned on their rebar reached Yuan 699/t, as against Yuan 297/t for July.

Written by Rong Zhang, zhangronga@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.