Chinese domestic long product prices continued to climb up by a small margin over the past week. Meanwhile, about 40 Chinese mills have hiked their ex-factory prices, thereby providing a certain amount of support for spot prices.
Product name | Specification | Category | Average price (RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
20 mm | HRB 335 | 3,630 | 532 | +40 | |
20 mm | HRB 400 | 3,770 | 553 | +30 | |
6.5 mm | Q235 | 3,500 | 513 | +20 |
Since the Chinese government recently announced that inflation control would become a focal point of its policy in the fourth quarter, many industrial insiders had begun making predictions about when credit supply would start to get tighter. However, based on signals given in the past week, the credit supply policy in China is now expected to remain positive up to the end of 2009. On November 5, an official at the People's Bank of China (PBC) said that, given the increasing number of positive factors, the current macroeconomy has continued to indicate steady growth, adding, however, that the basis of the economic recovery still needs to be consolidated. The official went on to state that the central bank will maintain its moderately loose monetary policy, adjust the relationship between economic restructuring and inflation, maintain reasonably adequate levels of liquidity, and enhance the sustainability of a gradual increase in the volume of loans.
Long product prices in eastern China climbed up in the past week, with increases ranging from RMB 50/mt to RMB 100/mt observed in the Fujian, Hefei, and Shanghai markets. Meanwhile, Jiangsu Province-based Shagang recently announced upward adjustments of RMB 90-100/mt to its early November prices of wire rod and rebar. Generally speaking, with a certain decline seen in inventories in several leading markets, and also taking into account the increased optimism in the market, construction steel prices in eastern China are expected to maintain a rising trend in the coming week.
In the south, the longs market moved up on a fluctuating trend over the past week, against the background of the upward adjustments made by leading local mills. However, the overall trading volume in the south began to weaken after market prices went up. On the other hand, apart from a minor rise in inventory in Guangzhou, inventories in the other regions have declined slightly. As regards the future, considering the increased costs of ordering new materials, most traders think that market prices will rise further in the coming period.
In Beijing and Tianjin, market prices first climbed up but then slipped down under the impact of the severe weather conditions experienced in the past week. Despite the weakening trading performance, many players are still looking forward to an upward movement in the future market.
By the end of November 6, total rebar inventory in all surveyed warehouses in China amounted to 3.91946 million mt, marking a week-on-week decline of 39,420 mt, the fourth straight week-on-week decrease, while wire rod inventory reached 1.17688 million mt, down 30,650 mt week on week.
On the raw materials side, domestic prices of iron ore, coke, scrap, and other raw materials have maintained their minor rising trend over the past week. Currently, market prices of domestic ore are around RMB 710-730/mt, while quotations of imported ore stand at $100/mt CFR. The increased costs provide strong support for rebar prices.
Overall, with the government still maintaining a loose monetary policy, traders have begun to express greater confidence in the future; meanwhile, spot prices have continued to be boosted by the steel futures market in recent days. In this context, construction steel prices are likely to rise further in the coming period.