Sharp increase in Chinese long prices after holiday

SteelOrbis Shanghai Chinese long product prices rapidly increased following the seven days long Labor Holiday. The overall sales figure is favorable, and the inventory has fallen down. Some steel mills further hiked their ex-factory prices. Thanks to the good export market, the current Chinese long products market sees tight availability. Therefore, wire rod prices in East China increased by RMB 200/mt ($25). As wire rod prices in North and Southwest China are at a relatively high level, the increase range is not that large. On the rebar side, influenced by the high purchasing cost of semi finished steel and the continuous growth in strip steel output, the supply reduced slightly. The inventory in Guangzhou and Shanghai saw an obvious decline compared with the condition before the holiday, as not many northern products arrived in southern markets. The market prices in southern markets witnessed a slight upward trend. Steel mills in different regions keep increasing their ex-factory prices due to the increase in market prices as well as the high semis cost. The increase range of wire rod ranges from RMB 100/mt ($12) to RMB 200/mt ($25), and that of rebar ranges from RMB 100/mt ($12) to RMB 200/mt ($25). Totally forty mills hiked their prices after the holiday, among which, Shandong based Qingdao Steel lifted its ex-factory prices five times. May is a traditional construction season; therefore, the demand will further increase. According to traders, the 25 mm and larger diameter rebar sell well before, showing that the construction sites are laying foundations for the buildings. But later the consumption of 16-25 mm diameter rebar increased, which is a powerful support to the market prices. At the moment, the most important factor that influences the market is the adjustment in export tax rebate policy. The change in this policy may affect wire rods more because of their large export volume, while rebar will not see a large influence thanks to its small export volume. According to rumors, a new export tax will not be imposed on semi-finished steel, neither an increase in their export quantity is expected. Therefore, semis prices will remain strong. Generally speaking, the long products prices in the Chinese market will continue ascending in the short term.