Rebar downstream demand resumed slower than expected

SHANGHAI, Mar 26 (SMM) – Prices of rebar may continue to struggle against the headwind of slower-than-expected recovery of downstream demand as manpower issues constrain the construction progress even as the resumption rate of work for building and infrastructure projects has climbed to 86.05% as of March 25, showed an SMM survey. 

A number of construction companies reported a slow return of workers, as the coronavirus outbreak caused a major hit to transportation and employment, and the effect may take some time to reverse. 

The construction sector was seen more vulnerable than infrastructure, as the resumption rate for workers at construction sites has reached only 67%, compared with a rate of 72% in the infrastructure sector, according to an SMM survey as of March 25. 

In addition, 24% of the companies that have restarted operations showed no plan to purchase raw materials steel in the near term as they had stockpiled before the Chinese New Year holiday or their current projects were about to finish. 

The actual downstream demand recovery for construction steel rebar could be not as strong as expected, even as China’s overall rebar inventories posted the first post-holiday decline in the week ended March 19. 

The reduced inventories lifted market sentiment this week. Traders in Hangzhou, Beijing and Guangdong said shipments have resumed to the normal levels of the previous year.