During the first half of the past week China's domestic long products market moved on a positive trend on the whole, with different increase margins observed in the various regions. Then, affected by the sharp fall in the stock market and steel futures market in the second half of the week, market prices in eastern China registered a downward correction; on the other hand, the Beijing market continued to climb up on the back of the increased ex-factory prices announced by Hebei Steel Group and Shougang. Meanwhile, general stability was observed in the other regional markets in China in the latter part of the past week.
Product name | Specification | Category | Average price (RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
20 mm | HRB 335 | 3,730 | 547 | +60 | |
20 mm | HRB 400 | 3,880 | 569 | +47 | |
Wire rod | 6.5 mm | Q235 | 3,670 | 538 | +63 |
Given the improved weather conditions, commercial activity in the regions in eastern China showed a general recovery in the first half of the week, thus providing a certain degree of support for market prices. Meanwhile, the price hikes announced by some local mills also caused the eastern market to move in an upward direction. However, as a result of the sharp fall in the stock market and steel futures market, the longs market in eastern China weakened during the remaining days of the week, with an obvious decrease recorded in the Shanghai and Hangzhou markets.
In the south, the market initially picked up under the impact of the increase in the steel futures market and of the positive performance in the eastern China market at the beginning of the week, while the trading volume in the south also expanded. During the second half of the week, however, the southern market began to show a certain softness following the sharp fall in the stock market and steel futures market.
Over the past week, the market in the northern regions was generally characterized by a relatively active trading performance. Despite the negative influence of the stock market and the steel futures market towards the end of the week, Hebei Steel Group hiked its ex-factory prices, thereby providing strong support for local market prices. As a result, construction steel prices in Beijing and the surrounding areas remained on a rising trend.
Long product inventory in the Chinese market has continued to climb up throughout the past week. Although the market has not yet come under pressure from the increased inventory levels, the continuous uptrend in inventory is a source of concern to players in the market.
On the raw materials side, the pig iron market retained its upward movement during the past week, the domestic scrap market continued to move steadily up, while billet prices remaining on their rising trend.
Currently, the capital market exerts a strong influence on the spot market for steel, leading to frequent fluctuations and increasing uncertainty in the steel market. Nevertheless, given the high prices of raw materials and the high production costs, the room for downward movement in the market will remain limited in the short term. As regards the coming week, since trading activity may be affected by the traditional slack season for demand, China's domestic longs market is expected to continue its fluctuating movement on the whole.