Growth in April is likely to lag behind last year's levels

Demand for construction steel in China is expected 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, according to a study by Mysteel.

According to Mysteel’s forecasts, domestic consumption of construction steel in China in April will increase 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 tons, while the planned volume for April is 6.38 million tons.

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 tons, far below the weekly average of 3.34 million tons 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 monitored by Mysteel 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, according to Mysteel. The increase was 52 yuan per ton 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.

As GMK Center reported earlier, 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.