Construction steel prices keep falling in Shanghai

Construction steel prices keep falling in Shanghai

Shanghai's construction steel market remained entrenched in a downward trend this week as leading traders took their cue from the ex-factory price reductions of steel mills and lowered their rebar prices. At the end of last week, Jiangsu Shangang Group, Qingdao Steel and No. 2672 Steel Plant decreased their HRB 335 rebar factory prices by around RMB 40/ton ($5). Although the decline in the prices of traders in the Shanghai market was rather mild at the beginning of the week (August 22), the traders did not quite see the activity they expected in the market. Therefore, the reductions gained pace day by day. On the other hand, prices of HRB 400 rebar and Q235 wire rod did not change much. On Tuesday (August 23), inquiries increased but the activity in the market was still not bright. Prices for HRB 400 rebar remained unchanged, with the exception of 12 mm diameter. That particular size saw a slight increase of RMB 10/ton ($1/ton) due to short supply in the market. According to some traders, there was great response to Baosteel's price reduction on Tuesday. Although the price adjustment did not involve construction steel material, it influenced traders nonetheless. On Wednesday (August 24), high-speed wire rod started the day with a decrease, as did HRB 335 rebar. Some traders in Shanghai even reduced their HRB 400 rebar prices. Meanwhile, 12 mm thick HRB335 inventories in Shanghai are falling to very low levels; MaSteel is expected to send a batch to Shanghai next week. High inventory levels of Q235 wire rod ensured that prices for that product fell. Since the beginning of August, the inventory of rebar in the local market has increased 30'000 tons, reaching 200'000 tons by the end of last week. This marks the highest level since late July. Another major reason for the slow activity in the market has been the strict measures taken by the banks on loans for construction projects. This has caused a drop in the demand for construction steel as fewer projects are being initiated. Under the weakening market, small-scale rebar producers in northern China are under serious pressure. They have to produce in small quantities with various specifications due to the market conditions. Some of these plants are planning to carry out overhaul works in the light of the weakening market.