Market: limited slide seen in Chinese rebar prices
Source: Mysteel
Jul 19, 2018 08:41
China’s rebar price has lost some ground over the past few weeks, with Mysteel’s HRB 400 20mm dia rebar benchmark price declining by Yuan 67/tonne ($10/t) or 1.6% on month to Yuan 4,178/t as of July 27. The price of the crucial construction long product is seen continuing to inch down slightly over coming weeks, given the general slowdown for summer, but the downward momentum seems limited, market sources said. They suggested that existing demand from the property market could lend the rebar price some support.
“China’s rebar price has been hovering at a fairly high level since May but the boost the mills have given to output has exerted pressure on prices,” a Beijing-based steel analyst commented on July 18. Mysteel’s HRB 400 20mm dia rebar benchmark price has been sitting around Yuan 4,049-4,245/t since May with the peak reached on June 15 being a three-month high.
“Government authorities have adopted a series of measures during this year’s first half to control air pollution and these have restricted blast furnace operations at steelmakers. Nevertheless, the mills still managed to maintain steel output – considering that they’re enjoying a profit margin of about Yuan 900/t for rebar these days,” the analyst added.
The rebar price might trend down further under supply-side pressure resulting from the high levels of output, she acknowledged. Rebar production among the 137 steelmakers nationwide which Mysteel surveys increased by 43,100 tonnes on month to 3.08 million tonnes over the week of July 5-11.
“However, the stable demand from the property market at present may be a motivator for the construction steel segment and may prevent rebar prices from plunging,” she said.
Nationwide, stocks of new housing accommodation both for rental and sale are low and house prices are rising, both of which could stimulate the construction of new housing and further boost the consumption of construction steel in the long term, Mysteel notes. New National Bureau of Statistics data showed that investment into the property market in June rose by a significant 9.7% on year to about Yuan 5.6 trillion.
By the end of June, inventories of ready-to-occupy housing dropped by 22.1% on year to 274.1 million sq m nationwide, NBS data also show. Among the 70 cities the bureau surveyed, over the month of June prices of new housing in China’s four first-tier cities remained stable from the previous month, but prices in the 31 second-tier cities and 35 third-tier cities increased 6.3% and 6% on month respectively.
Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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