Local Chinese longs prices stuck between high mills’ costs and insufficient demand

As of October 23, average Chinese domestic rebar and wire rod prices have edged down slightly compared to the previous week, but the price change has been minimal due to the losses, from which are suffering a number of mills.

The average rebar price has decreased by RMB 13/mt ($1.8/mt) on both daily and weekly basis on October 23, while the average 6.5 mm HPB 300 wire rod price has seen a decrease of RMB 17/mt ($2.4/mt) compared to the previous week. Prices have been fluctuated in the limited range in line with expectations, based on reduced production and insufficient demand.

Market players’ expectations for rebar and wire rod have been dampened by the poor performance in the market, resulting in the prevailing bearish sentiments among them. Rebar futures prices moved down, weakening the support to rebar and wire rod prices in the spot market. Currently, inventory of rebar and wire rod has been at relatively low level, bolstering their prices to certain degree. The demand for rebar and wire rod has been slacker than market players expected. It is thought that rebar and wire rod prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week too.

On October 23, rebar futures contract (rb2401) offers closed at RMB 3,572/mt ($497.5/mt) at Shanghai Futures Exchange, decreasing by RMB 35/mt ($4.9/mt) compared to October 16, while decreasing by 1.57 percent compared to the previous trading day.

Average domestic rebar and wire rod prices in China's main markets are presented in the tables below.

Rebar prices in local markets

All prices include 13 percent VAT and all prices are ex-warehouse.

 Wire rod prices in local markets

All prices include 13 percent VAT and all prices are ex-warehouse.

$1 = RMB 7.1792