Mysteel: Chinese construction steel prices have scope to climb up further

Mysteel: Prices of construction steel in China, including those of rebars and wire rods, are expected to remain on their upward trajectory in October, driven by seasonal demand upticks and supportive macroeconomic policies, Mysteel forecasts in its latest monthly report. However, while both demand and production are tipped to rise this month, there is caution over the pace of output growth and fluctuations in spot steel trading.

The report notes that substantial gains in Chinese construction steel prices were seen towards the end of September, which coincided with a notable recovery in market sentiment.

As of 30 September, China's national price of HRB400E 20 mm dia rebar, a bellwether of the country's steel market dynamics, had soared by RMB 607/tonne (t) ($85.9/t) m-o-m to RMB 3,944/t, including 13% VAT.

During October, construction steel output is forecast to peak in the latter half of the month, propelled by recent improvements in profitability among mills.

By the end of September, weekly rebar output among the 137 mills that Mysteel tracks nationwide came in at 2.05 million tonnes (mnt), up 432,000 t or 26.6% m-o-m. Meanwhile, the output of wire rods among the 92 mills Mysteel monitors climbed up by 16.7% or 130,800 t m-o-m to 915,400 t, Mysteel's data showed.

Anticipating the rise in production, construction steel inventories at Chinese steelmakers and traders are expected to accumulate over mid-to-late October. However, the pace of accumulation will be tempered by robust trading activities during the traditional peak season for steel consumption.

According to Mysteel's data, the combined inventories of rebars and wire rods held by 184 steelmakers and trading warehouses in the 35 cities sampled had totalled 5.18 mnt by the end of September, a decrease of 27.8% or approximately 2 mnt from end-August.

Regarding consumption, spot sales of rebars, wire rods, and bar-in-coils among the 237 trading houses surveyed by Mysteel averaged 122,641 t/day in September, up 10.6% or 11,742 t/d from August.

The report underscored a notable increase in daily trading volumes towards late September, signalling a robust recovery in steel demand from end-users and buoyant market conditions.

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