Chinese long product prices rebound

SteelOrbis Shanghai Influenced by the hike in ex-factory prices by five leading steel mills in North China, Chinese long products prices have seen minor upward trend. However, the upward movement did not last long pressured by the sluggish deals concluded. On Tuesday, March 21 five leading long products producers in North China; Shougang, Tangshan Steel, Xuanhua Steel, Chengde Steel and Tianjin Steel held their routine price adjustment meeting in Beijing. On the meeting, they decided to lift the April spot prices for shipments to Beijing. Accordingly, the April price of Q235 6.5 mm high speed wire rod increased RMB 130/mt ($16) to RMB 3,020/mt ($376) from a month ago, that of HRB335 16-25 mm large diameter rebar increased RMB 110/mt ($14) to RMB 2,950/mt ($367). These price levels are generally close to those in Beijing market, squeezing traders' profit margin. Thus, traders had to lift their price quotations. Nevertheless, the price increase did not last long as the commercial activity was not in line with the price hike. Traders in Guangzhou market also lifted their price quotations as they purchase most of their long products from northern steelmakers. The bearish transaction volume due to rainy weather also brought an end to the price increases in this region. The Shanghai market is still bothered by its somewhat high inventory. But data show that the inventory in Shanghai is in slight downward trend thanks to the low prices and small quantity of newly arrived products. On the other hand, the slow sales make it difficult to deplete the inventory. Consequently, the decrease range in inventory is not obvious. The sluggish condition of long products market will not last long. On one hand, demand is expected to expand significantly in April, and improve the situation for commercial activities. On the other hand, some rolling mills had to suspend their production to carry out overhaul works as they were not able to bear the cost pressure due to high semi-finished steel prices. This will alleviate the market pressure gradually as the supply quantity decreases in the future. Chinese long products prices are estimated to see a stable upward trend in the following week.