China's spot rebar price declines nonstop
China's national HRB400E 20mm dia rebar price, a bellwether of domestic steel-market sentiment, has lost ground for nine consecutive working days to hit a 6.5-month low of Yuan 3,782/tonne ($411/t) and including the 13% VAT as of March 12, or slumping by Yuan 215/t from that on February 28, according to Mysteel's assessment.
In the derivatives markets, rebar futures prices also keep the downtrend of late, with the most-traded rebar contract on the Shanghai Futures Exchange for May delivery dipping for the fourth trading day on March 13, down another Yuan 37/t from the prior day's settlement price to close the daytime session at Yuan 3,583/t.
The continuous dip in rebar prices was mainly due to a sluggish outlook for the recovery in domestic long steel demand, an industry watcher said. In China, work at construction sites has picked up rather slowly in the past few weeks compared to prior-year levels.
And the country's week-long "Two Sessions" political meetings wrapped up on Monday failed to fulfill market participants' hopes for stronger stimulus measures to prop up the ailing property sector, he elaborated.
In addition to the real estate market being in a slump, the source pointed out that steel demand would also lose some support from domestic infrastructure construction due to tight cash flow and local government debt risks.
So far this month, the spot trading volume of rebar, wire rod and bar-in-coil among the 237 steel trading houses Mysteel tracks nationwide averaged 103,417 tonnes/day, plunging by 43.6% on year and well below the threshold of 200,000 t/d for the peak season for steel consumption.
Besides, domestic steelmakers have thin profit margins or even losses on steel sales due to low demand, and many mills in East China's Shandong and Anhui and Central China's Hunan have opted to idle their blast furnaces for maintenance works, according to the source.
The lack of enthusiasm among steel producers to ramp up their output may subdue steelmaking raw materials prices continuously, and this will also be less supportive of domestic steel prices, he noted.
Written by Rong Zhang, zhangronga@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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