Rebar prices up in East China, wire rods in entire country

Wednesday, 24 May 2006 10:23:45 (GMT+3)   |  
       

SteelOrbis Shanghai The shortage in wire rods leads to a sharp increase in market prices. The price trend of rebar is relatively stable, but influenced by potential 19 percent increase in 2006 imported iron ore prices, rebar prices in East China have seen an obvious upward trend which drives up the overall nationwide market. Starting from Tuesday, May 16, CVRD has signed price agreements on iron ore for new fiscal year with some steel mills in Europe and Asia one after the other. In those agreements, the price increased 19 percent based on 2005 price level. Industry insiders think that Chinese steel mills will finally accept the 10-percent increase based on 2006 contract price for iron ore. This has a positive influence on attitudes of market players. In addition, the People's Bank of China will keep observe and research the influence on macro-economy from the dramatic increase in bank loans. No new monetary policy will be announced before June, which will boost market confidence. Affected by the rumors of export tax rebate, the rebar market prices in Shanghai fluctuated. Market players' attitudes got better after the iron ore price hike in overseas countries. Therefore, the purchasing volume expanded at the weekend, and supported by the newly arrived products, market prices have seen rapid increase. On Sunday, May 21, Shagang, leading long products steel mill in East China, hiked its rebar and wire rod prices by RMB 200/mt ($25) and RMB 150/mt ($19) respectively. Driven by the hikes in ex-factory prices of leading steel mills as well as traders' market expectation, market prices in Guangzhou have witnessed obvious upward trend. However, the transaction volume shrank due to the typhoon. The market prices are stable in the latter part of last week. The wire rod prices in North China keep increasing, while the price of rebar is rather stable. Tangshan Steel is now having overhaul for its rebar production line, influencing about 20,000 to 30,000 metric tons of output. Xuanhua Steel cut 70 percent of its production volume due to the equipment problems. Therefore, five steel mills in North China are expected to further increase their ex-factory prices on the price meeting at the end of May. Data from the National Bureau of Statistics show that during January-April, urban fixed assets investment is at RMB 1.8006 trillion ($225 billion), up 29.6% year on year with strong demand from the end user. Under the good export condition, the short supply of wire rod will not be alleviated in the short term. On the rebar side, products produced by northern steel mills to southern markets are limited. At present, the market prices are lower than the ex-factory prices in the Shanghai and northern markets. With the depletion of the products, the shortage of rebar in southern markets will become more serious. The long products' prices are expected to see further increase, as there's not enough products under normal market demand.

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