Sluggish Demand and Excess Supply Cause Global Steel Rebar Prices Stagnate in Early May

In the week ending May 5, the global Steel Rebar prices showcased a stagnancy in their price momentum owing to the dwindling downstream inquiries from the construction sector. The Steel Rebar market in Europe and China is undergoing a prolonged period of inactivity, with low levels of inquiries and slowing domestic sales and exports to other European countries. This is due to stalled consumption and hindered or postponed new development projects, resulting in a persistent decline in Steel Rebar prices in April. Market players attribute this decline to excess supply, weaker-than-anticipated demand, and reduced cost support. As a result of the sluggish downstream construction demand, market uncertainty has increased, and expectations for May have become more cautious. Although steel mill losses may lead to maintenance, production stoppages, and some support for Steel Rebar prices in May, the gradual recovery of the real estate market and limited improvement in Steel Rebar demand suggest that the Steel Rebar market is expected to remain unstable, and inactive in May.

In the Chinese market, the spot Steel Rebar market was quiet due to the holiday break amidst the rising raw material inventory. Following the holidays, there has been a significant drop in demand, leading to delays in destocking despite a slight easing of supply pressure. In response to plummeting finished steel prices, EAF-based steel mills have drastically curtailed their production, resulting in increased losses. Although the Steel Rebar price initially fell somewhat after the market opened, the market's selling attitude remained strong. Raw material prices have continued to decline steadily, with the sixth round of Coke reductions implemented promptly, but the domestic and international macroeconomic conditions remain under considerable strain, contributing to weak market confidence. However, some steel mills have reduced production of Steel Rebar due to losses, which has alleviated supply-side pressure.

In Europe, the Steel Rebar prices in the domestic market have been falling considerably each month, decreasing by around USD 45-55/MT. This decline is primarily due to weak demand and an excess of supplies at distributors and construction firms, causing European producers to decrease their capacity utilization. Given the prevailing uncertainty and lack of visibility, the current market trend is to either delay purchases or opt for back-to-back buying. Private residential development permits and the number of new construction sites have been decreasing steadily this year. As per the regional players, Europe's housing issue, which came to light many quarters ago, is worsening. In the first quarter of 2023, the decline in construction permits has accelerated year on year.

As a ripple effect, ChemAnalyst anticipates that Steel Rebar prices will remain subdued in the global market owing to the falling raw material prices and the down swinging downstream construction demand. According to the players, construction firms have visibility on their ongoing building projects until June and July. However, they are concerned about the lack of new orders for Steel Rebar, which affects their business operations. This reflects the overall slowdown in the construction industry due to the sluggish demand for Steel Rebar and other construction materials.