Chinese steel market predicts demand pickup in Sept

Domestic steel demand across China will improve this month with mills keeping production high and traders actively filling up their warehouses, believe Chinese steel market participants canvassed by Mysteel Global on September 3.

September-October in China is always a busy season for steel consumption as fine weather after the rainy season, the frequent typhoons and the high summer temperatures is very suitable for manufacturing and outdoor construction.

This month in particular, robust steel consumption is widely expected, as a slew of measures taken by Beijing to revitalise the economy after COVID-19, including the launch of new infrastructure projects, redevelopment of old residential areas and allocation of stimulus incentives for the auto and white goods manufacturing industries, will continue to take effect and accelerate in this year's second half.

"(I am) super confident," an official with a steel producer based in East China's Shandong province said.

Although he admitted that consumption among steel end-users had only just started to take off, he was certain that the surge will arrive soon. "No need to worry about the demand at all, it will definitely pick up," he told Mysteel Global, mentioning that his mill's steel inventories have already shown signs of shrinking.

Chinese steel traders have also been waiting for the September demand revival after a lukewarm August, but compared with the confidence of steelmakers, their optimism is tinged with caution.

"Now in Guangdong, it is still hot, and our sales are yet to show anything like a boom," admitted a long steel trader based in South China's Guangdong province. He told Mysteel Global that his company had sourced an extra 200,000 tonnes of long steel products, supplementing its usual stocks of about 300,000 tonnes, in preparation for the upcoming demand rush.

"But I am not sure when it will come," he said anxiously.

Over September 1-2, China's trading of construction steel comprising rebar, wire rod and bar-in-coil had been around 210,000 tonnes/day, just slightly above 200,000 t/d, the threshold below which traders say business is poor, Mysteel's survey across 237 Chinese steel traders showed.

Trading volume of construction steel 2019 VS 2020 (Unit: t/d)