China: Construction steel demand growth to slow further in May

• Approaching rainy season to dampen activity
  
  
• Rebar prices remain lower than end-Apr levels
  
  

Mysteel Global: Growth in China's construction steel demand is expected to slow further in May, mainly due to low expectations for policy support and the coming rainy season in some regions of the country, according to Mysteel's latest monthly survey.

The prediction is based on actual volumes of construction steel products bought by domestic end-users in April and their purchase plans for this month.

Mysteel's regular tracking of over 200 construction enterprises in China showed that they purchased a total of 5.66 million tonnes (mnt) of construction steel products last month, rising by 10.1% m-o-m, but the volume was 4.2% lower than their planned amount.

For this month, their planned buying volume is estimated at 6.05 mnt, representing a 6.9% increase from April's actual purchases, the survey results showed.

Infrastructure investment growth is likely to pick up further this month with the accelerated issuance of special-purpose bonds and the concentrated launch of major projects, which may provide some support to demand for construction steel.

However, overall demand growth is likely to be limited in May due to the trading lull during the country's Labour Day holiday over 1-5 May. Meanwhile, consumption of construction steel in southern China will likely be dampened with the coming rainy season, Mysteel Global learnt.

Over 6-12 May, the trading volume of construction steel comprising rebars, wire rods, and bar-in-coil among the 237 trading houses nationwide under Mysteel's regular tracking was 109,248 tonnes (t)/day on average, down by 6,429 t/d or 5.6% from the average for April.

China's finished steel prices have been hovering low so far this month, despite an improvement in market sentiment following China and the United States' temporary tariff reductions announced on Monday aimed at easing trade tensions.

As of 12 May, China's national price of HRB400E 20-mm dia rebar, a bellwether of domestic steel market sentiment, was assessed by Mysteel at RMB 3,317/t ($461/t), including 13% VAT, still lower by RMB 34/t from the end of April despite a d-o-d rebound of RMB 15/t.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.