China's construction steel demand to recover slightly in August

China's demand for construction steel is expected to see a slight recovery in August, according to the findings of Mysteel's latest monthly survey. Respondents suggested the high temperatures some regions are experiencing may ease later this month, and the quicker pace of construction on some key infrastructure projects may also help the recovery in demand to some extent.

The prediction is based on the actual volumes of construction steel products bought by domestic end-users in July and their purchase plans for these products this month.

Mysteel's regular tracking of over 200 domestic construction enterprises showed that their total buying volume of steel products registered 6.34 million tonnes during July, lower by 2% on month, as high temperatures and frequent heavy rains across most regions of China hampered outdoor construction.

This month, the actual purchase volume among the sampled building contractors is estimated to reach 6.45 million tonnes, slightly higher than that for July, according to the survey.

Although seasonal disruptions from high temperatures and heavy rains will persist for the time being, the intense heat affecting some regions is expected to ease in the latter half of this month. Meanwhile, the accelerated pace of work on some key infrastructure projects may also partially cushion the impact of the traditional off-season for steel demand in summer.

However, the real estate industry remains stuck in the doldrums, with no notable improvement in sight. This means the building sector cannot provide meaningful support for any increment in construction steel demand.

China's steel market still faces significant uncertainties going forward. Many building contractors remain cautious and are tending to keep low inventories or purchase only based on their actual needs, the findings showed.

Construction steel sales in the spot market have yet to show any improvement, with the combined daily trading volume of rebar, wire rod and bar-in-coil among the 237 trading houses nationwide under Mysteel's tracking averaging 84,277 tonnes/day over August 1-13, down by 960 t/d compared with the average for July.

China's construction steel prices are hovering low, with Mysteel assessing the national price of HRB400E 20mm dia rebar on August 13 at Yuan 3,216/tonne ($477/t) including the 13% VAT, lower by Yuan 18/t from the end of July.

Source:Mysteel Global