MYSTEEL: China's rebar output, demand to fall in '24
During 2024, Chinese steelmakers' margins when selling rebars might remain subdued as robust market expectations crash head-on with a weak reality, Mysteel predicts. Overall demand for longs from the domestic property sector may stay at a low level, it highlighted.
China's real estate industry is gradually transitioning towards a healthier and more stable developmental trajectory, emphasizing quality. Simultaneously, traditional infrastructure construction has reached a saturation point, while the rapid expansion of "new infrastructure" projects is underway, Mysteel's report noted.
This evolution in the market landscape is prompting downstream industries reliant on construction steel to diversify their steel usage. Consequently, there is a gradual decline in the proportion of construction steel being incorporated in buildings, according to a trend observed by Mysteel.
The "new infrastructure" encompasses seven pivotal domains – including 5G networks, ultra-high voltage power transmission infrastructure, inter-city transportation and rail systems, new-energy vehicle charging stations, data centers, AI, and the industrial internet, Mysteel Global notes.
Projections also suggest that rebar inventories held among steel mills and traders' warehouses could potentially peak at 9 million tonnes this year, marking a substantial 7.8 million tonne decrease from 2023.
Moreover, the costs incurred by domestic steel mills when producing rebars are anticipated to decline in 2024, due to the expected increase in the supplies of iron ore, coke, and steel scrap, according to the forecast. Notably, the forecast emphasizes the likelihood of mini-mills earning better profits compared with integrated mills.
In terms of pricing, Mysteel envisages the Mysteel rebar absolute price index fluctuating considerably throughout the year in the range of Yuan 3,800-4,200/tonne ($531-587/t). The average price is predicted to be around Yuan 4,000/t, indicating a tiny uptick of Yuan 12/t from the previous year's average.
Additionally, Mysteel estimates a 1.2% on-year dip in China's consumption of wire rod to 128 million tonnes in 2024 and a 2% decrease in rod output during the same period to 132 million tonnes.
China's output and consumption of rebar, wire rod in 2024 (unit: mln t ) | ||||
Output | YoY Change | Consumption | YoY Change | |
Rebar | 251 | -2% | 249 | -2.39% |
Wire rod | 132 | -2.01% | 128 | -1.19% |
Source: Mysteel |
Written by Rong Zhang, zhangronga@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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