Chinese long product prices fluctuating at the bottom

SteelOrbis Shanghai Chinese long products prices saw a slight reduction throughout last week, with sluggish commercial activity and slight changes in market inventory. On July 28, the average price of 20 mm diameter HRB 335 rebar in the three major markets of China; Shanghai, Beijing and Guangzhou was down RMB 7/mt ($1) week on week at RMB 2,943/mt ($369), and that of 20 mm diameter HRB 400 rebar was down RMB 3/mt at RMB 3,087/mt ($387). The average price of 6.5 mm Q235 high speed wire rod was down RMB 23/mt ($3) at RMB 3,157/mt ($396). The Central Bank of China raised the deposit reserve rate by another 0.5 percentage point last week in order to further tighten the liquidity ratio, which demonstrated the determination of Central Government to strengthen the macro-control. The action brought some pressure on the market. However, most domestic and international experts were expecting the government to increase the interest rate. Central Bank's preference to hike the reserve rate rather than the interest rate demonstrates that the Central Government does not desire to curb the current macro economy too much, except for eliminating the impact of international hot money on RMB exchange rate. Therefore, holding any pessimistic attitude towards Chinese steel market is unnecessary. After Chinese long products prices became stable throughout the previous week, it is hard for the prices to go down or up due to the pressure of bearish demand and support of the costs; therefore, the prices may only see slight fluctuations, as they did last week.