SteelOrbis Shanghai
Due to insufficient demand facing the rapid price increase, Chinese long product prices have slightly dropped after hitting a high level. However, overall prices are still in an upward trend.
On the other hand, both steelmakers and traders have been exporting large quantities of products because of the lower domestic prices than the export prices which are at $370-375 FOB level nowadays. Exports also help steelmakers and traders to deplete some stocks.
Yet, the nationwide high market inventory still remains as the main factor suppressing the prices. The existing low-priced products are likely to be depleted with the expansion in demand.
Domestic market prices are expected to remain stable next week. However later, the Chinese long product prices will see a sharp increase when the market inventory narrows drops to a certain degree.
At weekend, the average local price of 20 mm HRB 335
rebar increased RMB 53/mt ($7) over last week to RMB 3,003/mt ($374), which is, however, RMB 17/mt lower compared to the highest level recorded during last week. 20 mm HRB 400
rebar price rose RMB 50/mt ($6) to RMB 3,070/mt ($382), RMB 10/mt ($1) lower than the highest level recorded during last week. The average price of 6.5 mm Q235 high speed
wire rod rose RMB 33/mt ($6) to RMB 3,043/mt ($378), RMB 14/mt lower than the highest price during last week.
Although the demand has not picked up, traders' profits are large according to the current price levels. Traders' desire to do realize transactions led to the drop in prices in the latter part of the week.
Ignoring the cost of
freight, the cost of
rebar production for rolling mills is more than RMB 2,900/mt ($361) (on theoretical basis). The increase in costs paves the way for the sales price increase in the future. Furthermore, the
semis producers in Hebei Province are now focusing on producing more common carbon billets. Therefore, it will not be easy to find 20 MnSi billets, which will help to decrease the product volume in the future.