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Demand for construction steel in China is anticipated to continue to recover in April this year, driven by the accelerated restart of construction sites and the launch of new projects. However, the growth rate may still lag behind the levels seen in the same period last year. Domestic consumption of construction steel in China in April will surge by about 25% compared to the previous month, based on the actual purchases by end users in March and their current plans.
A survey conducted among construction companies across the country shows that their actual purchases of steel in March increased by 45.4% m/m – to 5.5 million tonnes, while the planned volume for April is 6.38 million tonnes. At the same time, consumption of construction steel in China in March did not meet market expectations. Weekly domestic apparent consumption of rebar averaged only 2.3 million tonnes, far below the weekly average of 3.34 million tonnes in the same period last year.
In April, the number of new construction projects in the country may grow steadily due to favorable weather and an easing of financial pressure in the sector, which will help to restore demand for construction steel. In the first 10 days of April, daily rebar, wire rod and coil trading volume among 237 Chinese trading houses regularly averaged 158.98 ktpa, a significant increase from the 121.8 ktpa average in March.
Domestic steel prices in China also showed some signs of recovery in April, with the price of HRB400E 20 mm rebar, which is an indicator of steel market sentiment, reaching RMB 3,666 per tonne ($507/t) including VAT as of April 10. The increase was 52 yuan per tonne compared to the end of March. However, Chinese construction contractors are still cautious about the market in the short term.
Most of them prefer to buy steel products for immediate needs rather than stockpiling. Green construction in China will boost domestic demand for green steel. The country is setting new targets to reduce carbon emissions and save energy in the construction industry. In particular, China’s Green Building Action Plan for 2021-2025 encourages the use of high-quality, low-carbon rebar.
Also Read : China's steel bar exports increased by 11.5% in first half of the year US Steel raised steel shipments by 3.8% y/y in 2023
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