Beijing wire rod market analysis (Oct. 12-19)

Beijing wire rod market analysis (Oct. 12-19)

The Beijing construction steel market has been slack for several months. Price reductions after the National Holiday saw high-speed wire rod prices in Beijing dip below those of HRB335 rebar, which is unusual. By the end of trading on Monday (October 17), the price of 6.5mm Q235 wire rod, at RMB 2'870/ton ($354), was RMB 70/ton ($9) lower than that of HRB335 rebar. Shanghai and Guangzhou wire rod prices show that under normal conditions, high-speed wire rod prices are closer to that of HRB400 rebar; i.e. RMB 100-150/ton ($12-18) higher than that of HRB335 rebar. Market sources report that Shougang produced large quantities of high-speed wire rod in a short period, which led to excess inventory in Beijing. This in turn caused prices to fall sharply after the National Holiday. The current high-speed wire rod inventory level stands at 70'000 - 80'000 tons, 1.5 - 2 times that of the normal level of 30'000 - 40'000 tons. It was reported that in the past, Beijing high-speed wire rod was delivered to neighboring regions; however, those regions have made few purchases from Beijing recently due to the continuous price cut. Consequently, inventory in Beijing continues to accumulate, which leads to oversupply. So it can be said that the decline in Beijing wire rod prices is a function of decreasing demand from surrounding areas as well as the arrival of new batches of products. The unusual situation of higher HRB335 rebar prices compared to wire rod will probably continue for the time being. Shanghai SteelOrbis