Steel logistics, demand hammered by heavy rains
Source: Mysteel
May 08, 2018 18:24
Market watchers fear that construction steel sales and deliveries in many parts of China will be impacted in coming days as torrential rains sweep across much of the country. The rains which deluged many parts of China since last week are seen hampering normal operations on construction sites and disrupting transportation of steel products in these regions.
The rains began falling across Central, East, South China and Northwest China from last weekend, according to the China Meteorological Administration, causing havoc in provinces such as Henan, Hubei, Fujian, Guizhou, Guangdong and Guangxi, Mysteel understands.
Guangdong province in South China, for example, expects no let-up in the rains until May 9, leading one Guangzhou-based construction steel trader to admit that buying interest is now very muted. “The rains actually began here last week and work on most major construction projects is being hindered,” he told Mysteel.
“Traders like us not overly burdened with steel inventories are unwilling to lower our prices to secure orders, but nevertheless, rebar prices may spiral downward by a large margin after the notable increases we saw in late April,” he warned.
For now, the determination of Southwest China traders to defend prices seems to be holding. As of May 8, the benchmark price of HRB 400 20mm rebar in Guangzhou city was at Yuan 4,430/tonne ($703/t) including the 16% VAT, flat from the previous day. This contrasted with Mysteel’s national average benchmark price of HRB 400 20mm rebar which dropped another Yuan 10/tonne on day to Yuan 4,168/t including the 16% VAT on Tuesday.
The rains have already disrupted logistics and dragged down the trading volume of construction steel, as evidenced by Mysteel’s daily monitor of construction steel transactions on the 134 steel traders nationwide. The volume of daily deals was down 11% on week as of May 7.
“Rebar demand in most regions of Fujian province has dropped so much because of the construction disruptions. Our sales have been limited,” a steel trader based in Fuzhou in South China’s Fujian province complained. Unlike his counterpart in Guangzhou, this trader saw no alternative but to sacrifice on price to reduce stockpiles to generate cash flow.
Mysteel’s HRB 400 20mm rebar benchmark in Fuzhou had dropped the most among the China’s main steel-consuming regions as of May 7, tumbling Yuan 60/tonne on day to Yuan 4,190/t including the 16% VAT, according Mysteel’s database.
Written by Thea Feng, fengyx@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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