Long steel prices increase on low inventories

SteelOrbis Shanghai Last week was a turning point for the entire steel market in China, as it marked the beginning of the third quarter. Many mills published their ex-factory prices for September, and most of them -especially the leading ones- hiked their prices. The price increases also affected the long steel market. Long products continuously moved at a low price level through August, resulting in a certain impact on the production growth of the mills, especially for the rolling mills. The rolling mills have lowered their semi finished steel purchases. Therefore, long products' market inventory is unlikely to see a sharp increase in the short term and the market prices are expected to maintain the steady and upward trend. With the further decline in inventories in all the regional markets, traders preferred to retain their products instead of selling; therefore, market prices saw a relatively big increase. Meanwhile, the rise in market prices boosted the confidence of the mills; therefore, most of them hiked their ex-factory prices last week. Among them, the five leading steel mills in Northern China and Jiangsu Province based Shagang raised rebar prices by RMB 20-30/mt ($3-4). The dominant position of the above steel mills in their regions and the whole country, plus the rising momentum the market originally has, helped the prices to be accepted by the market. Nevertheless; according to the situation in various markets, the current price increase of long products is directly related with the low stock levels in various regional markets, but the commercial activities have not improved because there is no any expansion in the demand of end-users. Under these circumstances, traders are both cautious and optimistic about September. At the same time, they also worry about the influence of the subsequent supply on the market. On September 1, the average price of 20 mm diameter HRB 335 rebar in China's three major markets, Shanghai, Beijing and Guangzhou increased RMB 53/mt ($7) from August 25 to RMB 3,073/mt ($387), and that of 20 mm diameter HRB 400 rebar increased RMB 50/mt ($6) to RMB 3,177/mt ($400). The average price of 6.5 mm Q235 high speed wire rod increased RMB 54/mt ($7) to RMB 3,247/mt ($408).