SteelOrbis Shanghai
Influenced by increasing inventories, Chinese
wire rod prices continued to see a sharp decrease over the past week, with a slight decline in
rebar prices.
On October 20, the average price of 20 mm diameter HRB335
rebar in
China's three major markets, Shanghai, Beijing and Guangzhou, was down RMB 27/mt ($3) to RMB 3,100/mt ($393), that of 20 mm diameter HRB400
rebar was down RMB 13/mt ($2) to RMB 3,227/mt ($409). The average price of 6.5 mm Q235 high speed
wire rod decreased RMB 56/mt ($7) to RMB 3,187/mt ($406).
Throughout the past week, with the low
trading volume in the eastern
China market,
rebar prices declined continuously. Because of the remarkable increase in
wire rod inventory in the Shanghai market, traders are eager to sell their products, leading to a sharp decrease in market prices. The market in southern
China continued its downward trend. Despite the small decrease in products from leading mills such as Shaoguan Steel and Guangzhou Steel, prices of products from other mills went down sharply, driving down the whole market. Long product prices in northern
China moved in different directions.
Wire rod prices kept dropping considerably, but
rebar prices were stable due to the improved commercial activity and the slight extent of the decline in inventory in the Beijing market. Since winter has settled in in the northeastern region, most
construction work is close to conclusion, resulting in reduced demand.
The whole Chinese market is in a weak and downward trend. The only exception is the Beijing market, which enjoys stable
rebar prices driven by the Olympics project. Generally, market players are not optimistic about the future.
As regards supply, the latest figures released by the
China Iron & Steel Association indicated a continuous growth in long products
production. Remarkably, in September which is one day less than August,
rebar production increased approximately 110,000 mt month on month. Chinese steel bar and
wire rod production in September totaled 6.9494 million mt and 6.1881 million mt, up 106,800 mt and down 91,000 mt respectively compared with August. Daily
production reached 231,600 mt and 206,300 mt, up 4.96 percent and 1.83 percent month on month. From January to September, Chinese
rebar production output amounted to 61.3 million mt, up 18.3 percent year on year, while output of
wire rod increased 19.7 percent to 52.58 million mt.
Furthermore, with the brisk demand in the Russian
construction industry, export quotations of
billet and long products from
CIS countries have been quite strong since the beginning of August. However, with the upcoming winter, the reduction in domestic
construction is likely to cause a decline in quotations, thus leading to reduced Chinese
billet and long products exports and creating more pressure on the Chinese market.
With the influence of the coming winter on
construction in northeastern, northwestern, and northern
China, demand is becoming weak, creating more and more pressure on the eastern and southern
China markets.
In recent days, Chinese government has begun strengthening inspections on newly-opened projects in all regions. The Ministry of Land and Resources will seriously investigate the cases violating land laws and rules, so as to facilitate the execution of national macro-control measures. In addition, at the meeting to discuss the Q4 period, Premier Wen Jia Bao called for strict control on medium- and long-term loans and limited fixed assets investment. This kind of political environment will cause a slowdown in demand for
construction steel, which will affect the
construction steel market trend in the long term.