Home prices continue to rise in most Chinese cities despite local government efforts to take the heat out of the property market, while a rise in excavator sales indicates firm support for construction steel in the coming months.
In August, house prices rose in 59 of the 70 Chinese cities monitored by the National Bureau of Statistics, compared with the month before. Prices fell in nine cities and were unchanged in two.
New home price growth averaged around 0.6% on the month across all cities.
Since July, some 10 cities in China have introduced new measures to stabilize the property sector, in a bid to prevent speculative purchases.
Though construction -- which accounts for around 50% of steel consumption -- is expected by most market participants to be softer in Q4, strong excavator sales indicate a decent pipeline of work.
In August, sales of excavators rose by 51.3% on the year to 20,939 units. Sales in the domestic market reached 18,076 units, up 56.3% on the year, while exports jumped by 25.7% to 2,863 units, according to the China Construction Machinery Association.
This took January-August sales to 210,474 units, up 28.8% on year, of which domestic sales accounted for 190,222 units, up 30%.
Solid demand for construction steel has been offset by climbing rebar inventories, which reached 6.6 million mt in 20 cities monitored by the China Iron and Steel Association in early September, up 1.5% on late August.
This has put pressure on domestic rebar prices, which have eased from Yuan 3,810/mt ($561.4/mt) at the start of September to Yuan 3,770/mt ($555.5/mt) on Sept. 14, S&P Global Platts data showed.
Domestic rebar margins were $24.55/mt on Sept. 14 after averaging $48.19/mt in August, according to Platts data.
-- Analyst Crystal Hao, Analyst Sylvia Cao
Source : Steel Business Briefing