- Accelerated construction activity ahead of winter to boost steel demand
- Infrastructure projects dominate construction activity, real estate remains weak
China’s demand for construction steel is expected to continue recovering this month, mainly driven by expectations of accelerated building activity before winter arrives, according to the findings of Mysteel’s latest monthly survey.
The prediction is based on the actual volumes of construction steel products bought by domestic end-users in September and their purchase plans for these products this month.
Mysteel’s regular tracking of over 200 domestic construction enterprises showed that in September, they purchased 6.68 million tonnes (mnt) of steel products – higher by 3.4% from August – as improved weather conditions in most regions benefitted outdoor construction.
For October, the actual purchase volume among the sampled building contractors is estimated to reach 6.81 mnt, up by 1.9% from last month, according to the survey.
October remains a peak month for steel consumption in China, and progress on construction projects across many regions is expected to speed up before the winter cold sets in.
At present, infrastructure projects still dominate construction activity, the findings show. This reflects the steel market’s heavy reliance on key projects and livelihood-related infrastructure to shore up demand. Conversely, the real estate sector, mired in a prolonged downturn, is unlikely to lend too much support to domestic steel demand.
With uncertainty still looming over China’s domestic consumption, many building contractors remain cautious about building up steel stocks, preferring to keep their inventories at low levels and purchase mainly in line with their actual demand.
Although construction steel sales in the spot market have improved slightly after the week-long National Day holiday ended on 7 October, domestic steel prices remain weak overall amid the slower-than-expected recovery in end-user demand, Mysteel Global noted.
On 13 October, Mysteel assessed the national price of HRB400E 20mm dia rebar at RMB 3,326/tonne ($497/t) including the 13% VAT, dipping by RMB 4/t from the end of September.
Over 8-13 October, the combined daily trading volume of rebar, wire rod and bar-in-coil among the 237 domestic trading houses under Mysteel’s tracking averaged 96,817 tonnes/day, rising slightly by 3.5% compared with the average for September.
Note: The article is published as part of a content sharing agreement between Mysteel Global and BigMint.
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