China's demand for construction steel is expected to see a modest rise this month due to the impact of the May Day holiday over May 1-5 and the rainy season in southern China arriving later this month, 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 April 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 reached 6.41 million tonnes in April, jumping by 11.1% on month. This points to the recovery in demand last month as construction projects accelerated during the peak building season of spring, aided by the pleasant weather witnessed in most regions of China last month.
For May, the sampled building contractors plan to purchase 6.72 million tonnes of steel products, up 4.8% from April's actual purchases. This marks a slower pace of increase, as spot sales slowed during the May Day holiday. Moreover, southern China is expected to enter the rainy season later this month, which would likely disrupt outdoor construction to some extent, the findings showed.
Currently, construction activity continues to be primarily driven by infrastructure projects, which account for about 76% of total construction work. This result suggests that key projects and livelihood-related projects remain the core source of demand for construction steel, as the real estate sector has yet to show any significant improvement, according to the release.
Domestic building contractors continue to be cautious about accumulating stocks given the market uncertainties. Many still prefer to purchase steel products based on their actual demand and keep their inventories low to mitigate risks, Mysteel Global learned.
Chinese construction steel prices have remained firm overall recently amid the steady demand from end-users. On May 14, Mysteel assessed the national price of HRB400E 20mm dia rebar at Yuan 3,494/tonne ($514/t) including the 13% VAT. This was higher by Yuan 79/t from the end of April, even though it had declined by Yuan 17/t from the recent high set on May 12.
However, high-priced steel products have difficulty finding buyers, with the combined daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 trading houses nationwide under Mysteel's tracking averaging 109,649 tonnes/day during May 6-14, down slightly by 734 t/d compared with the average for April.
Source:Mysteel Global
