Chinese steel prices hit a 3-year low, weak demand may last until the first quarter of 2024

Therefore, he does not expect the market to improve quickly. The price of steel bars in China has hit a three-year low, showing a slowing growth rate of the world's second-largest economy, especially in the still-weakening real estate sector, according to Reuters.

Last week, the spot price of 20mm HRB400 rebar - used to reinforce "concrete" for buildings and infrastructure - fell to 3,510 yuan ($507.8) per ton. That is the lowest level since April 2020, when the COVID-19 pandemic that began in China restricted most industrial activity.
As of May 29, steel prices recovered slightly at 3,533 yuan/ton.

Steel prices for October delivery are currently at 3,447 yuan per tonne, the lowest level since October 2020, according to Investing data.

Low demand during the construction peak season (March and April) has started the decline, as reflected in the price of rebar futures down nearly 17% since the end of March. Any recovery in prices. When China enters the summer months, if any, it will be slow.

Data: Investing (Aggregate US)

"China's situation is pretty bad. The outlook for steel demand is worse than it was three months ago," Takahiro Mori, executive vice president of Japan's Nippon Steel Corp., told Reuters last week.

The real estate market and infrastructure construction account for about 60% of China's steel demand. However, infrastructure investment stimulus programs have slowed, while the real estate market is also growing slowly.

Analysts at Huatai Futures said China's steel demand in April fell by 3.4%, as opposed to an increase of 8.7% in March.

They said demand in May fell 2.5% year-on-year.

Additionally, just 53.11% of new special-purpose bonds, commonly used to fund infrastructure projects, flowed into the sector in April, down from 56.38% in the month of April. 3 and 63.29% in February, analysts at China Future said in a report on May 24.

Data from the National Bureau of Statistics shows that investment in real estate, the largest user of steel, fell 6.2% year-on-year in the first four months of the year, more severe than the decline. 5.8% in the January-March period.

Source: CICC, Reuters (Vietnamese: H.My)

According to NBS, new construction works started in the first four months of the year fell 21.2% from a year earlier.

"The impact of the stimulus measures on the real estate sector is not as good as it used to be... Demand (for housing) may fall further," said analysts at Sinolink Securities. In addition, the manufacturing sector also unexpectedly contracted last month.

As a result, sluggish demand is putting pressure on steel mills ahead of the summer months of June to August, when construction activity in China typically slows due to high temperatures and heavy rains in the south. interfere with outdoor activities.

According to Mysteel, only a third of the country's mills are currently operating profitably, and shares of global miners fell last week as prices of iron ore fell due to weak Chinese demand.

Steel demand will not improve until September, when the weather is more favorable for construction and a series of economic stimulus measures applied since the end of last year to the property market, a producer steel based in Eastern China said.

Nippon Steel vice president Takahiro Mori said the outlook could be even more bleak.

“Steel demand is likely to remain weak at least this year or this fiscal year (through March 31, 2024). Therefore, we do not expect the market to improve quickly," he said.

Vietnambiz