China’s steel demand is expected to gain some momentum in September as construction activity recovers from summer weather disruptions and manufacturers step up seasonal purchasing. The improvement, however, is likely to remain uneven across product segments.

Flat steel demand should continue to benefit from relatively firm consumption in automotive, machinery and other manufacturing industries, while rebar and wire rod may see a slower recovery as weakness in the property sector continues to weigh on construction-related buying.

Signs of better market conditions were already visible in August. China’s steel distribution PMI increased by 1.3 percentage points from July to 47.4%, with several indicators linked to sales, orders and purchasing showing improvement.

Even so, stronger prices could prompt mills to restore output as profitability improves, limiting the extent of any rally. The September market is therefore expected to feature gradual destocking and a moderate seasonal recovery rather than a sharp rebound.