China's construction steel prices recovered last week, with the resumption of trading turning market sentiment more positive.

In Shanghai on Friday afternoon, 20mm HRB400 rebar was trading at CNY 3,480-3,500/tonne ($481-484/t), up CNY 100/t from last Friday, Kallanish assesses. The May 2024 rebar contract on the Shanghai Futures Exchange closed at CNY 3,612/t on Friday, down by CNY 4/t compared with Thursday and CNY 122/t lower from a week before.

There are still Chinese steel mills announcing new maintenance plans last week in response to the market downturn. However, there are growing expectations of higher production if the market strengthens. In particular, transactions in the spot steel market have recovered, along with the upward trend in the futures market.

According to data from the National Bureau of Statistics, China's steel bar and wire rod production in the first two months of this year was 32.099 million tonnes and 21.143mt, a year-on-year decrease of 0.3% and 1.5%. The output of construction steel products fell but the output of other major steel products increased, indicating that the proportion of construction steel of total steel has further decreased. Chinese real estate developers Vanke and Evergrande are once again the centre of debt crisis concerns.

However, the market also expects a subsequent recovery in demand. There are market rumours since last Thursday that the National Development and Reform Commission will speed up the progress of the central budget investment plan and speed up the review of local government special bond projects. This is also to promote the progress of key projects and drive the recovery of market demand.

Major long steel producers in eastern China, Shagang, Zenith and Yonggang cut their long steel export prices by CNY 50-200/t for the last ten days of March (see table below). Meanwhile, they provided CNY 120-220/t subsidies to sales agents aiming their sales losses in the past period.

Chinese construction steel ex-works prices (including VAT), 21-31 March 2024

  Rebar HRB400
16-25mm (CNY/tonne)		 High-speed wire rod
6.5mm (CNY/t)		 Rebar in coil
8-10mm (CNY/t)
Shagang offer 3,920 4,110 3,960
Shagang change -100 / -200
Zenith offer 3,700 4,000 4,000
Zenith change -100 -50 -50
Yonggang offer 3,750 4,050 4,050
Yonggang change -100 -50 -50

Source: company information