Construction steel prices down in main Chinese markets

Construction steel prices down in main Chinese markets

Construction steel prices in China’s main markets showed on Thursday (September 15) no signs of deviating from their downward path. Prices in the Beijing and Guangzhou markets slumped, while prices in Shanghai were weak. Overall, the transaction situation in these three markets was poor. Traders continued to hold a pessimistic view towards the future of the market. The average price of HRB335 rebar in the Beijing, Shanghai and Guangzhou markets was RMB 3’187/ton ($393), down RMB 23/ton ($3) from Wednesday. HRB400 rebar carried an average price of RMB 3’333/ton ($411), down RMB 20/ton ($2), while Q235 high-speed wire rod saw a miniscule decrease of RMB 4/ton ($0.5) to end at RMB 3’273/ton ($404). For details, please see the following: Shanghai Third-rate brand names of HRB335 rebar experienced a slight decline in price. HRB400 rebar and wire rod prices were equal to those of Wednesday. For second-rate brand names, the prevailing market price for 20mm diameter HRB335 rebar was RMB 3’100/ton ($382); for 20mm HRB400 rebar, RMB 3’330/ton ($411); and for 6.5mm Q235 high-speed wire rod, RMB 3’320/ton ($409). Prices of leading brand names were equal to those of Wednesday. On Wednesday (Septemebr14), the actual price of HRB335 rebar was weak. Upon opening on Thursday, traders decreased their price quotations by RMB 10-20/ton ($1-2) one after another. During the day, prices further declined. Some traders sold their products at RMB 3’080/ton ($380). On Wednesday afternoon, the actual deal price of HRB400 rebar was down RMB 10/ton ($1). On Thursday, price quotations were down RMB 10/ton ($1); however, the actual deal price was equal to that of Wednesday afternoon. Traders indicated that a batch of Ma Steel’s 14mm and 25mm diameter rebar arrived in Shanghai. Wire rod prices remained steady. Beijing Beijing construction steel prices experienced a constant decline on Thursday. The prevailing market price of 20mm HRB335 rebar was RMB 3’100/ton ($382), down RMB 50/ton ($6) from Wednesday. 20mm HRB400 rebar slid RMB 40/ton ($5) to RMB 3’260/ton ($402), while 6.5mm Q235 high-speed wire rod fell RMB 10/ton ($1) to RMB 3’140/ton ($387). Traders, with a “wait-and-see” attitude in mind, quoted their prices late. Rebar prices witnessed a large decrease. Although small diameter rebar showed a slight decline, 18-25mm diameter rebar fell by RMB 50/ton ($6) to RMB 3’100/ton ($382). The price difference between small and large diameter rebar reached RMB 120/ton ($15). As known by the markets, some steelmakers were short of HRB335 rebar. The market trend of HRB400 rebar was similar to that of HRB335 rebar. There will be a batch of Shougang’s 32mm diameter rebar arriving in Beijing. Xuanhua Steel also made a production arrangement that is likely to alleviate the short supply. Q235 wire rod posted a slight price decline. Presently, in the Beijing market there are sufficient products of small-scale steelmakers in northern China. Products of Shougang, Tangshan Steel, Xuanhua Steel and Chengde Steel decreased. Traders showed a passive stance towards doing business since there was no profit margin when traders got their payment calculated theoretically. Market players indicated that Shougang had pressure on its inventory as its distribution was not successful except for those directly sold to the key provincial projects. It was reported that Shougang adopted the policy of “placing orders without pricing”, i.e. pricing after selling. It was reported that the recent price slump prompted traders to reduce their prices in an attempt to increase their transaction volume. They aimed for the quickest possible turnaround. A majority of the market players are paying close attention to the price trend before the National Holidays; they believe that this period will likely be an important turning point. Guangzhou In the Guangzhou market, traders decreased their prices yesterday afternoon. Today (September 15), construction steel material dropped comprehensively as hardly any transactions were concluded. For second-rate brand names, the prevailing market price of 20mm HRB335 rebar was RMB 3’360/ ton ($414); for 20mm HRB400 rebar, down RMB 20/ton ($2) to RMB 3’410/ton ($420); and for Q235 high-speed wire rod, unchanged at RMB 3’360/ton ($414). Influenced by market trend in Beijing and Shanghai, some traders decreased their actual deal prices for HRB335 rebar by RMB 20-30/ton ($2-4) on Wednesday afternoon. Upon opening Thursday morning, leading traders decreased their prices once again. The accumulated decrease range of some steelmakers’ products reached RMB50/ton ($6). Although prices dropped Wednesday afternoon, HRB400 rebar prices were basically stable. On Thursday, some traders slightly cut their prices of HRB400 rebar and HRB335 rebar. Moreover, some traders indicated that the recent demand for 12mm and 28mm diameter HRB400 rebar had picked up, keeping those prices basically stable. Some leading traders reported that the current pricing reflected that of Beijing. A close eye will be kept on the changes in the Beijing and Shanghai markets during the remainder of the year. According to the statistics from the National Statistics Bureau, during the first eight months of 2005, fixed assets investment for urban areas was RMB 4.12 trillion ($507.4 billion), with a year-on-year increase of 27.4 percent and a 28.5 percent year-on-year increase in August. Investment for the development of the real estate industry was RMB 892 billion ($110 billion), which increased 22.3 percent. There were 177’000 construction sites, a year-on-year increase of 22’998. The total investment for construction projects was RMB 1.48 trillion, up 29.7 percent from the previous year. There were 114’000 new construction projects, an increase of 19’808 year on year. The total investment for new construction projects was close to RMB four trillion ($492.9 billion), up 28.4 percent year on year. The realized capital was RMB 4.68 trillion ($577.7 billion), a year-on-year increase of 27.4 percent. The capital within the national budget increased 26.7 percent; domestic bank loans were up 15 percent; the utility of foreign investment rose 25.1 percent; and self-raised capital climbed 36.3 percent. The market is unlikely to get better in the short run as the surging output continues to out pace the growth in demand. SteelOrbis Shanghai