China steel prices hit three-year low on demand woes
09-12-2023
China steel prices hit three-year low
Steel rebar prices in China hit their lowest in three years this week, underscoring flagging growth in the world's second-largest economy, particularly in its weak property sector.The spot price of HRB400 20mm steel rebar - used to reinforce concrete for buildings and infrastructure - fell to 3,510 yuan ($507.80) per tonne in Shanghai on Thursday, data from consultancy Mysteel showed.
That's the lowest since April 2020, Investment in the property sector, the largest user of steel, declined by 6.2% year-on-year in the first four months of the year, data from the National Bureau of Statistics showed, worsening from a 5.8% fall for the January-March period.
New construction starts by floor area contracted by 21.2% as well over January-April from a year earlier, worsening from a 19.2% fall during the first three months, according to the NBS.
"The impact of stimulus measures on the property sector is not as good as it was before ... Demand (for houses) may contract further," analysts at Sinolink Securities said in a note on Wednesday.
Manufacturing unexpectedly shrinks
The resultant sluggish demand is increasing pressure on steel mills ahead of the summer months of June-August, when construction in China typically slows as high temperatures and heavy rain in the south hinder outdoor activity.
Only a third of the country's mills are currently operating at a profit, according to Mysteel, and shares in global miners plunged this week as iron ore prices fell on China's weak demand.
Steel demand will not improve until September, when weather is more favourable for construction and a raft of economic stimulus measures in place since late last year filter through to the property market, an East China-based steel producer said.
China steel market has bleak prospects
"It could remain weak at least throughout this year or this fiscal year (to March 31, 2024). Therefore, we don't expect the market to improve quickly," he said.
($1 = 7.1121 yuan)
