MYSTEEL: China H2 rebar demand to improve from H1
For the rest of H2, China’s domestic demand for construction steel will still be driven by the series of measures adopted by the central government to rescue the domestic economy from the negative impact of the COVID-19 that include its commitment to more capital injection in the infrastructure construction project, and the continuing recovery in the newly-launched property projects, according to the report.
However, “compared with H1, the demand will be more evenly divided among the months of H2, so that no spikes will be observed and the monthly volume will not exceed the peak months in H1,” it stated, estimating the annual construction steel consumption will grow slightly on year for the whole 2020.
Over March-May, China’s daily sales of construction steel consisting of rebar, wire rod and bar-in-coil averaged 214,579 tonnes/day among 237 traders, up 6% on year and or above 230,000 t/d over April-May, both being substantially higher than the 56,463 t/d on average over January-February, according to Mysteel’s database.
The robust demand over March-May or in particular over April-May was mainly to do with the release of the delayed demand from the first two months because of the Chinese New Year holiday and then the outbreak of the pandemic, Mysteel explained.
As for production, construction steel output had been running high in general on the seemingly robust demand as well as the newly-commissioned capacities, as over January-July, seven bar rolling lines at 8.3 million tonnes/year of rolling capacity and three wire rod rolling lines with 2 million t/y capacity went on stream, according to Mysteel’s survey.
For the whole H2, construction steel output may ease from the record high levels in H1 but may persist relatively high even in some slack demand season such as July-August, as over 90% of the country’s steel capacities are from the blast-furnace mills and another eight bar rolling lines with 8.3 t/y rolling capacity and six wire rod lines with 5.2 million t/y capacity will commission over August-December, Mysteel Global understands from the report.
Construction steel output from the electric-arc-furnace producers and steel re-rollers, however, will be with uncertainties, depending on the stable and affordable supply of semis and steel scrap, the same obstacle they had experienced in H1, Mysteel highlighted in the report.
Over H1, price spread between steel scrap and rebar ranged Yuan 1,000-1,200/tonne ($143-171/t) than the over Yuan 1,500-2,500/t over the previous years, and China’s EAF makers, thus, only profited less than Yuan 100/t for rebar sales most of the time.
On the other hand, the price difference between billet and rebar was usually at Yuan 200-300/t for most of the first half of 2020, making it challenging for most of the independent rolling mills to operate as per normal, given that their usual rebar rolling cost from billet averages Yuan 300-400/t, Mysteel Global understands.
“Integrated mills have been producing at the full swing, and they have reducing spot billet supplies to the market, further buoying up billet prices,” the report summarized the H1 market situation and expected this trend would continue in H2.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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