Chinese rebar prices rose for a 10th consecutive trading day Monday, the longest stretch of back-to-back rising prices on record, supported by supply shortages and a firmer property market that could spur demand for construction steel.
In Beijing, spot prices of 18-25 mm diameter HRB400 rebar were assessed at Yuan 3,970/mt ($564/mt) ex-stock actual weight, including 13% VAT, Monday. Prices were up Yuan 215/mt, or 5.7%, from November 12, S&P Global Platts data showed.
Strong rebar demand in cities in northern, eastern and southern China over the past two weeks coupled with a lack of material for certain grades supported prices, market participants said.
"Market sentiment was very bearish in the past few weeks, and so many rushed to lower inventory levels," an eastern Chinese mill source said. "What's more, rebar demand in eastern China is strong now, and is why in some regional markets we see a lack of some specifications of rebar."
Rebar spot prices in Hangzhou have risen for 11 straight days to Yuan 4,200/mt ex-stock, including VAT, with gains since November 11 of Yuan 420/mt, market participants said.
Rebar inventories in the eastern Chinese city have fallen to about 240,000 mt this week, the lowest level this year, mill sources and traders said.
Other market participants pointed to the recent lowering of prime lending rates as a factor that could release more credit to the property market and other parts of the economy.
The one-year loan prime rate was lowered by 5 basis points November 20 to 4.15%, while the five-year LPR was cut by the same amount from the previous month to 4.8%, according China's National Interbank Funding Center.
"A stable trajectory in the property market could stimulate steel market demand," a Shanghai-based analyst told Platts.
Further, data released earlier this month showed signs of a pickup in China's property market, which is closely related to rebar prices.
Cumulative floor space of commercial buildings sold posted positive growth for the first time this year over January to October, up by 0.1%, National Bureau of Statistics data showed.
"Real estate sales in October seem to have improved, according to the data," a Shanghai-based rebar trader said. "But we'll have to see whether this can be sustained."
"If sales of property improve further, it could stimulate steel demand," a Singapore-based steel trader said. "But as the central government is seeking to stabilize the property market and doesn't want large flows of capital into it, we'll have to see how the market reacts in the next few months."
Central government agencies on November 19 urged local governments to conduct checks to audit capacity, output and investment figures reported by steelmakers, which also spurred Chinese rebar prices.
This was in light of how a number of Chinese mills had capacity utilization rates exceeding 100% this year, which led the National Development and Reform Commission, the Ministry of Industry and Information Technology and the National Bureau of Statistics to ask all steelmakers for steel production figures for the first nine months of the year.
"The notice means that the government wants to investigate whether there is any inconsistency between production and capacity," an eastern China mill source said. "In general, there would be no impact to large, mainstream mills like us, and will not affect our production."
Another eastern Chinese mill source said it saw the notice, but had yet to been contacted by the local government about it.
"Our mill is a standard, low-carbon and green enterprise, so this notice will not affect us," a third eastern China mill source said. "On the contrary, it may be beneficial" if those not complying with regulations had their output curtailed, he added.
Source: S&P Platts