Infrastructure Construction Remains Promising and to Support Steel Demand

Published: Mar 2, 2023 14:26

Source: SMM

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In 2023, infrastructure construction remains promising. In January, the policy of restricting the purchase of real estate was lifted in many places, and there were expectations of steel prices benefiting from favourable real estate purchase policies.

SHANGHAI, Mar 2 (SMM) - In 2023, infrastructure construction remains promising. In January, the policy of restricting the purchase of real estate was lifted in many places, and there were expectations of steel prices benefiting from favourable real estate purchase policies. The rebar price went up after CNY holidays due to market optimism. Yet, the market optimism failed to materialise in February, preventing steel prices from rising and dragging on spot prices significantly.

According to downstream feedback in SMM survey, in the next two months, the number of new projects at real estate-related enterprises will account for a higher 24%, but nearly half of them are house upgrading projects, meaning they will not use construction steel. The remaining half of the projects will be contributed by state-owned real estate developers, and the better-capitalised enterprises can take more new projects.

About 33% enterprises have a stable number of new projects. Considering that the number of new real estate projects has been shrinking since the second half of last year, the demand for steel in the real estate industry may continue to decline rapidly in the first quarter.

In terms of infrastructure construction, 48% of the companies indicated that the number of projects will increase in the first quarter of this year, and no company has clearly stated that the number of projects will decrease. The proportion of companies that expect a stable number of new projects and are uncertain is both 26%.

The number of downstream construction projects increased, most of which are roads and railways projects. The infrastructure sector may continue to underpin demand for steel.

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