South China’s steel demand dampened by heavy rains
Pouring rains have been lashing cities and provinces south of the Yangtze River since the beginning of June, and as of June 9, floods had affected over 2.6 million people in 11 provinces including South China’s Guangdong, Southwest China’s Guangxi, Guizhou, Southeast China’s Fujian and Jiangxi, according to a release by the Ministry of Emergency Management. Some 1,300 houses had been destroyed, with direct financial losses amounting to Yuan 4 billion ($565 million), the ministry said.
The continuous rainfalls, which will usually last from now through July, have already had a direct impact on domestic steel demand, especially on steel items for outdoor construction, market sources indicated Thursday.
“It rains three or four times a day these days, and because of that, work on construction projects is totally stopped,” a steel trader based in Guangdong province told Mysteel Global. “The building contractors are not working and hence, are not buying. I can basically give up on June (business),” he said.
A market watcher based in Guangxi also noted the serious influence of the rains on steel demand. “Progress on all projects will be disrupted by the rains unless the ceilings have been installed,” he said. “Normally, demand during June until September will be not as good, first because of the impact of the rainy season and then because of the high temperatures that follow in summer,” he added.
Compared with South China, disruptions caused by the rains in East China are not as obvious up until now, a mill source based in East China’s Jiangsu province observed.
“The rains here are not as serious as those in South China, such as Guangdong, and occasionally there is sunny day as well, so the impact is not as obvious,” she said. However, she expressed concern that steel prices may soon make a downward correction as a result of the slower demand.
As of June 10, China’s spot trading volume of construction steel including rebar, wire rod and bar-in-coil totalled 181,491 tonnes/day, according to Mysteel’s survey across 237 Chinese steel traders. This was in sharp contrast to the daily trading volume for April-May which averaged more than 230,000 tonnes/day.
The trading volume in South China has been particularly low, according to the survey, reaching just 59,970 t/d on June 10, down 20% from a month earlier.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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