MYSTEEL: China's construction steel prices to rise further in Nov
Chinese construction steel prices rebounded late last month after posting weak performance earlier in the month, mainly thanks to fast declines in steel inventories with the recovery in demand from end-users and the positive sentiment impact of a raft of favorable stimulus measures newly introduced by the Chinese government, according to the report.
Mysteel's assessment of the country's national price of HRB400E 20mm dia rebar, a barometer of the domestic steel market sentiment, gained by Yuan 37/tonne ($5.1/t) from the end of September to reach Yuan 3,878/t including the 13% VAT as of October 31.
In October, China's output of rebar and wire rod both declined as domestic steelmakers had been suffering profit losses on their sales of these long products, the report noted. However, integrated mills and mini-mills showed a disparity in their production last month, with the former group cutting output for both rebar and wire rod while the latter slightly ramping up production.
By end-October, the weekly output of rebar among the 137 steelmakers Mysteel checks nationwide fell by 27,000 tonnes on month or 442,500 tonnes on year to 2.61 million tonnes, and that of wire rod shed by 19,300 tonnes on month or 297,700 tonnes on year to 1.05 million tonnes, Mysteel's data showed.
Mysteel projected that China's construction steel production may stay on the downtrend in November, as a scaleback in construction steel output may occur among steel producers in northern China where downstream demand enters a seasonal lull in winter and the country's overall hot metal output usually decreases in winter months as well.
Last month, construction steel inventories held by Chinese traders thinned significantly and at a faster pace, thanks to the fall in production and rebound in consumption, the report pointed out.
The total inventories of rebar and wire rod at the trading warehouses in the 35 cities Mysteel follows settled at 4.89 million tonnes by the end of October, losing 592,300 tonnes on month and down 215,500 tonnes on year.
As for consumption of construction steel, the daily trading volume of rebar, wire rod and bar-in-coil among the 237 trading houses under Mysteel's survey averaged 153,931 tonnes/day in October, rising by 3.6% on month though lower by 1.9% from a year earlier.
"Demand for construction steel is worth expecting," the report said, as end-users are likely to speed up the pace of construction work before year-end. Meanwhile, Beijing has decided to issue an additional Yuan 1 trillion in special treasury bonds during the fourth quarter, mainly for infrastructure projects, with around Yuan 500 billion planned to be utilized within the year.
Written by Rong Zhang, zhangronga@mysteel.com
Edited by Alyssa Ren, rentingting@mysteel.com
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