Construction steel prices in China to rise in June

According to Mysteel's latest monthly report, Chinese construction steel prices, including rebar and wire rod, could bottom out before recovering in June. The recovery in prices will be driven by stronger production costs and hopes that the central government will introduce new stimulus policies to boost the domestic steel industry, the report said.

Last month, domestic construction steel prices recorded a significant decline due to weaker steel raw material prices and as bearish sentiment hurt the sector, the report said.

As of May 31, the national price of 20mm HRB400E rebar, which is a barometer of steel market dynamics, fell by 197 yuan per ton (US$27.7 per ton) from the end of April to 3,680 yuan per ton including VAT. according to Mysteel, this is a new low since May 9, 2020.

Structural steel production may recover slowly and steadily this month, but growth opportunities will be limited, the report notes, as domestic steelmakers may remain cautious about ramping up production given no clear signs of a decline in mill profitability. enjoy any noticeable improvement.

According to the report, in May, many domestic factories decided to reduce production in order to reduce the risks they may face. On an annualized basis, China's construction steel production was much lower than in the same month last year.

Between May 25 and May 31, rebar production among the 137 steelmakers in China regularly surveyed by Mysteel increased by 4,300 tons month-on-month to 2.73 million tons, although this figure was down 242,100 tons year-on-year. Wire rod production among Mysteel's 92 track manufacturers was down 90,400 tons per month to 1.04 million tons, as well as 361,000 tons year-on-year, according to Mysteel.

The pace of building steel destocking could continue into June, a month when steel consumption is stagnant despite increased production, the report said. However, he also warned that supplies of some items of certain sizes and specifications could be cut due to overstocking.

As of June 1, stocks of rebar at 184 domestic steel mills and trading warehouses in 35 Mysteeltracks cities were 8.1 million tons, and stocks of wire rod were 1.8 million tons, down 1.8 million tons and 880,200 tons, respectively. month, according to the data.

In terms of construction steel consumption in May, the daily trading volume of rebar, wire rod and coiled rod between 237 Mysteel trading houses averaged 156,699 tons per day, down 4.2% compared to the previous month, but up 1. 7% over the previous year. . The report notes that the demand for steel in different regions of the country differed last month, with Northwest China seeing the largest monthly increase of 15.8%, while volume in East China fell the most by 7.3% on a monthly basis. .