China's construction steel prices to remain under pressure in May'26

• Long steel prices may weaken amid rising supply
  
  
• Strong early-May demand to fade with seasonal slowdown
  
  

MysteelGlobal: Construction steel prices in China will likely come under downward pressure this month, stemming primarily from weakening supply-demand fundamentals, according to Mysteel's latest monthly report on the sector.

Demand for construction longs will remain resilient during the first half of this month, supported by end-users such as building contractors restocking after the May Day holiday ended on May 5 and by comfortable weather conditions keeping construction sites open and working, the report suggests. These should underpin long steel prices to some extent, it adds.

But long steel output is expected to recover as domestic steelmakers enjoy better profit margins. This is likely to exert downside pressure on the market in the second half as end-user demand weakens, especially in southern China with the arrival of wet season rains, the report warns.

Regarding rebars for example, on April 30 blast furnace and electric-arc-furnace steelmakers sampled by Mysteel were earning average profits of RMB 62/t ($9.1/t) and RMB 143/t ($21/t) when selling their rebars, effectively double the margins they were making in late-March, according to Mysteel's assessment.

Prices of construction steel items made significant gains in April, buoyed by firm cost support - such as higher freight rates due to the Mid East conflict - and from the usual recovery in domestic steel demand in spring, the report noted.

On April 30, Mysteel assessed the national price of HRB400E 20mm dia rebar at RMB 3,415/t ($502/t), up by RMB 83/t ($12/t) from the March 31 level.

The strength of end-user demand last month is partly reflected in active spot transactions, with the average tonnage of long steel products including rebar, wire rod and bar-in-coil among 237 trading houses under Mysteel's tracking averaging 110,383 tonnes/day in April, soaring by 27.5% from the average in March.

On the supply side, long steel output had retreated on-month by the end of April after mills had lifted output earlier in the month.

Over April 23-29, weekly rebar production among the 137 Chinese steelmakers under Mysteel's coverage remained largely steady on month at 2.07 million tonnes (mnt). Over the same period, weekly output of wire rod among the 92 surveyed mills Mysteel checks showed a negligible on-month retreat, down by 1.1% or 9,000 tonnes (t) to 838,800 t.

This coincided with a sharp seasonal inventory drawdown, with the tonnage of rebar and wire rod held in commercial warehouses in the 35 cities Mysteel showing a marked decline as of April 30, dropping by 13.9% or by 1.02 million tonnes from end-March to 6.32 mnt.

In parallel, the combined volume of rebar and wire rod stockpiled by the 137 surveyed Chinese steel mills as of April 30 had also thinned, declining by a large 19.1% or 543,300 t on month to 2.31 mnt.

But weakening market fundamentals in the late-May period may reverse the ongoing reduction in long steel inventories, Mysteel's report warns. As such, high inventory levels would reimpose pressure on construction steel prices and intensify market risks.

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