Chinese construction steel market recap
China's
construction steel market slowed at the end of August, and no improvement is anticipated in September.
Shanghai
On August 29,
rebar prices saw a decline at the beginning of the day but remained stable thereafter. However,
wire rod prices decreased in the afternoon because of a lack of activity in the market. The transaction volume of
wire rod increased slightly following the price cut.
The price decrease in all products was around RMB 20/ton by the end of the day: 20 mm diameter HRB 335
rebar traded at RMB 3'140/ton ($387), 20 mm diameter HRB400 was at RMB 3'370/ton ($416) and 6.5 mm diameter Q235
wire rod was at RMB 3'330/ton ($411).
The inventory of 22 mm HRB335 has been relatively high since Masteel, Pingxiang Steel and Tangshan Steel recently sent batches to Shanghai.
Wire rod inventory also continued to increase. A new batch of Tangshan Steel 22 mm HRB 400
rebar arrived on Tuesday (August 30) and brought the price of this product down by RMB 10/ton. The market went weaker on Wednesday, with hardly any
wire rod transactions in Shanghai because people preferred carrying out transactions in Hangzhou, where
wire rod prices were more competitive.
The prices of all three long products saw decreases of around RMB 10-20/ton on the last day of the month. The price of 20 mm HRB 335 even fell to RMB 3'090/ton for a while during the day.
Beijing
The situation in the Beijing
construction steel market was not all that different from the situation in Shanghai. There were few transactions, and prices kept falling. However, in Beijing, the prices differences among various traders were more pronounced.
The transaction situation of HRB 400 was the worst among the three kinds of long products. Its high inventory level pressured the prices to fall around RMB 100/ton during the final days of the month.
On Wednesday (August 31), the price of 6.5 mm Q235
wire-rod was around RMB 3'230/ton ($398), 20 mm HRB400
rebar was RMB 3'280/ton ($404) and 20 mm HRB335
rebar was also around RMB 3'230/ton ($398).
However, there are currently many
construction projects being carried out in and around Beijing. More activity is expected in the Beijing
construction steel market soon.
Guangzhou
Guangzhou was more stable than Beijing and Shanghai during the final three days of August. The prices showed no changes on Monday and Tuesday, but they decreased slightly on Wednesday after being affected by the continuous price declines in Shanghai and Beijing.
Traders in Guangzhou are pessimistic about the market situation. They refrain from placing new orders with producers and try to keep the inventory level in the market balanced. The
construction steel level in Guangzhou is estimated at around 270'000 tons, which is a normal level for the market. HRB335 and HRB400
rebar products were even in short supply on Wednesday.
Nevertheless, it is reported that Guangdong province would step up some key
construction projects in the province, which may bring some action to the slow market.
September market forecast
Shagang Steel announced a RMB 70/ton ($9) decrease in its September
rebar prices. The announcement immediately made an impact on the Shanghai steel market, pulling
rebar prices down slightly.
Furthermore, five steel plants in northern
China – Shugang, Tangshan, Xuanhua, Chenge and Tiangang – also announced that they decreased their HRB 335
rebar price by RMB 90/ton ($11) and 6.5 mm
wire rod price by RMB 80/ton ($10). Therefore, the prices also fell in Beijing.
Shaoguan Steel in Guangdong province also decreased its prices for September. The price of
wire rod fell RMB 20/ton ($2).
The market is expected to continue its slowdown in September because the macro-control policy of the central government will continue showing its impact on the real estate industry. Yet, it should be noted that existing
construction projects will gain pace in September because of expected better weather conditions.
The growth rate of
China's real estate investment is expected to drop further. Meanwhile,
construction steel
production in the country will increase. As the summer ends, the short power supply situation of the country will ease, allowing for
production increases in the steel industry.
However, the
manufacturing costs of
construction steel are not expected to fall. Northern steel mills will start stockpiling raw materials towards the end of September. Therefore, the decrease in
construction steel prices will be limited.