Long products prices see strong rebound in northern China

SteelOrbis Shanghai Influenced by the unchanged ex-factory prices announced by the five leading northern mills, long products prices saw a rapid rebound in northern China over the past week. The market in other regions remained stable, with no changes in overall market inventory. By the end of trading on December 31, the average price of 20mm diameter HRB 335 rebar in the three major Chinese markets - Shanghai, Beijing and Guangzhou - was up RMB 60/mt ($8) to RMB 3,187/mt ($409), while that of 20mm diameter HRB 400 rebar was up RMB 60/mt ($8) to RMB 3,330/mt ($427). Meanwhile, the average price of 6.5mm Q235 high speed wire rod was up RMB 70 ($9) to RMB 3,243/mt ($416). On December 27, the five leading mills in northern China released their January ex-factory prices for long products. Although the market prices of long products have been consistently lower than the ex-factory prices in northern China, the mills still made no change from their December price levels. Therefore, after the announcement of the new ex-factory prices, distributors had to pull up prices so as to avoid continuous losses. Furthermore, the construction industry also began to replace stock and this boosted up the market trading volume. Several leading mills in northern China are scheduled to carry out overhauling work in January, and this is expected to result in reduced market supply. It is for this reason that the steel mills have refused to lower their prices. Moreover, due to the relatively low market prices in previous weeks, many domestic mills delivered their supplies to other regional markets. Thus, the local market inventory is at quite a low level, and this also contributes to the recent price rebound. With regard to eastern China market, prices generally showed stable movement, with a slight decrease in trading volume and a small increase in inventory compared with the previous week. Since this market stepped steadily up over the past weeks, the local traders are quite cautious about the market movement. In this atmosphere, the eastern China market did not follow the trend of the northern region. Meanwhile, after the continuous and sharp increase of recent times, the upward tendency in the southern China market finally came to a halt. With confusion over the local market, quotations differed widely among the various traders. Summing up, the ex-factory prices announced by the five leading northern mills directly drove up long products prices throughout last week. In addition, the relatively low market inventory also supported the price rise. However, the other regional markets were not greatly affected by these issues. Northern China is not likely to see any remarkable increase in the coming days after soaring so sharply. Therefore, the overall market will remain stable in the short term.