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Momentum in infrastructure to support steel rebar consumption and prices

iconApr 27, 2020 12:24
Source:SMM
Spot prices of construction steel rebar in China will see limited downside room in the short run, supported by an anticipated further increase in infrastructure demand, which will sustain the slide in rebar stocks even as production continues to gather pace. 

SHANGHAI, Apr 27 (SMM) – Spot prices of construction steel rebar in China will see limited downside room in the short run, supported by an anticipated further increase in infrastructure demand, which will sustain the slide in rebar stocks even as production continues to gather pace. 


SMM assessed the national average price of spot rebar at 3,561.4 yuan/mt as of April 26, down 2.4 yuan/mt from April 24 and down 25 yuan/mt from a week ago. 

 

Apparent consumption of rebar in China (Unit: 10,000 mt, source: SMM)


Construction of new projects for infrastructure will be the major driving force of near-term downstream demand, as about 90.9% of infrastructure-related companies said they have new projects to come online. This compared with a ratio of 61.9% for house construction companies, according to an SMM survey.


For overall construction sites in operation, the resumption of work rate has crept steadily higher to 93.2% as of April 26. The infrastructure sector has resumed work at a rate of 94.5%, up 34.7 percentage points from end-March, with the rate for the house construction sector at 92%, 56.3 percentage points higher than end-March. 


Most Chinese regions have seen their respective resumption of work rates recovering to above 90%, while the reading came in at around 80% in north-east China due to more stringent local control measures for the prevention of a potential second wave of the COVID-19. 


About 26.4% of downstream companies reported tight cash flows or expressed concerns about cash flow issues, which could weigh on their construction progress. But some companies are optimistic about an easing to the financial burden with the real estate market re-opening in China. 


It is worth noticing that about 67.9% of the downstream enterprises reported plans to start new projects in the upcoming three months, with 35.9% companies in a continuous need to recruit workers as they accelerate construction. 

 

Market commentary
Steel
Rebar
infrastructure

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