China's rebar output, demand to decline further in CY'25

MySteel: China's rebar production and demand are expected to decline further this year, continuing the trend from the previous year, Mysteel predicts in its newly-published report for this long steel product. The country's rebar output is forecasted to fall by 6% on year this year to reach 202 million tonnes, while demand is expected to decrease by 7.2% on year to 199 million tonnes.

In 2025, Chinese steelmakers are likely to maintain the same approach to production they used in 2024, which focused on aligning production levels with actual market demand. This strategy involves more flexible supply adjustments, ensuring that output is closely tied to the fluctuating needs of the market, according to the report.

However, weak sentiment surrounding winter stockpiling, coupled with ongoing issues in China's real estate sector-particularly efforts to destock housing inventory and address mounting debt-could lead to further reductions in construction steel production, the report elaborated.

Besides rebar, Mysteel projects a significant decline in wire rod production as well, with a 9.8% drop expected for 2025. This would bring the total output of wire rod in China down to 104 million tonnes this year.

On the demand side, China's property market remains in a deep adjustment phase that is exerting downward pressure on steel demand. Growth prospects for traditional infrastructure projects, which historically drove much of the demand for construction steel, are also seen as limited, the report highlighted.

Meanwhile, the rapid development of "new infrastructure" projects, such as those focused on digital and 'green' technologies, is leading to a diversification of downstream sectors that consume construction steel, according to the report.

The increasing physical substitutability of construction steel is playing a role in reducing its demand. The share of construction steel used in projects is gradually declining, as alternative materials and methods become more viable, the report noted. Although infrastructure investment will still provide some support for the steel market, it is unlikely to result in significant growth in long steel demand, it added.

As a result, consumption of construction steel is projected to continue declining in 2025, with consumption of wire rod, for example, seen tumbling by 9.8% to around 97 million tonnes, Mysteel's data showed.

The price of rebar in China has also been impacted by the decline in production and demand. For the whole of 2024, Mysteel's rebar price index averaged Yuan 3,675/tonne ($502/t), sharply lower by Yuan 314/t from the previous year's average of Yuan 3,989/t. This drop in prices is primarily attributed to weak domestic demand, which has dampened trading activity and reduced the volume of direct steel supply, despite the significant role that exports have played in alleviating some pressure on the domestic market.

Looking ahead to 2025, Mysteel expects the steel market to experience high export volumes, weak domestic demand, and low production levels. Steel inventories will likely remain low, and the supply-demand dynamics are expected to shift rapidly between peak and off-peak consumption seasons. This will likely lead to quicker price adjustments as the market reacts to these changing conditions.

Mysteel's rebar price index is forecast to fluctuate between Yuan 3,300-3,900/t during 2025, with the annual average price likely to be around Yuan 3,550/t.

Steel producers in China may see some improvement in profitability from long steel sales this year, particularly rebars. The steel industry is expected to experience a mix of short-term losses and long-term gains, with margins estimated to range from a loss of Yuan 150/t to a Yuan 300/t gain.

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