Approaching May Day may bring some momentum to longs market

SteelOrbis Shanghai Following the announcement by five North Chinese mills that they would increase their prices further on May 1, long products market saw better sales figures, while the inventory is still relatively high. The price fall, which had been continuing for some time due to the high inventory pressure, came to an end on Friday, April 21, upon the announcement by the five mills. However, the response to the announcement was not very strong because the increase range was within the market expectations. Beijing and Shanghai recorded slight price increases on Friday and the range of increases is larger today. Yet, average prices of rebars and wire rods in the major markets recorded RMB 7 to 10/mt ($1) decreases week on week. Construction sites are expected to increase their purchases this week, which is the last week before May Day. Market prices may increase throughout the week if the purchases increase high enough. According to the figures from the State Statistics Bureau of China, the GDP in the first quarter increased 10.2 percent year on year to RMB 4.3313 trillion ($540.74 billion), faster than the 9.9 percent increase a year ago. The social fixed assets investment in the first three months was RMB 1.3908 trillion ($173.66 billion), up 27.7 percent year on year, 4.9 percent higher than the growth rate in 2005. According to these figures, the demand for long products is strong, and the rapid increase in output is the major reason leading to the current sluggish market condition. Meanwhile, the strong demand for Chinese billets from the international market keeps the prices of these products at high levels. Therefore, rolling mills have difficulties in sustaining their rebar production especially, which may in turn lessen the supply pressure on the domestic market.