Chinese long products market gets weaker

SteelOrbis Shanghai The Chinese long products market has slacked off over the past week, with a slight decline in market inventory being observed. On November 24, the average price of 20 mm diameter HRB 335 rebar in the three major Chinese markets - Shanghai, Beijing and Guangzhou - was down RMB 20/mt ($3) to RMB 3,107/mt ($396), while that of 20 mm diameter HRB 400 rebar was up RMB 6/mt ($1) to RMB 3,323/mt ($423). Meanwhile, the average price of 6.5 mm Q235 high speed wire rod was down RMB 27 ($3) to RMB 3,193/mt ($407). The bad weather conditions in the northeastern and northwestern regions caused many construction sites to call off work for the winter, leading to a shrinkage in the long products trading volume. As regards the northern China market, the harsh weather conditions began to show their impact here also. The Beijing market saw a bad trading performance on rebar over the past week, with prices decreases being caused by the increased inventory. Meanwhile, wire rod prices saw stable movement, due to the support of low inventory levels. At present, the steel mills are still attaching considerable importance to exports. For example, sources have reported that Shougang is aiming at a total of 47,000 mt in wire rod exports for November. The major five mills in northern China are due to announce their ex-factory prices for December. Whether their exports have retained their quantity levels in November will be critical in the mills' decisions on their prices. Influenced by the rainy weather, long products prices went steadily down in the eastern Chinese market. Most traders are pessimistic about the future, and this is the major reason behind the price drop. The southern China market showed weak movement, mainly due to the sharp shrinkage in trading volume. Market inventory remained at a low level. However, prices dropped after Shaoguan Steel increased its supply to the Guangzhou market. Overall, the Chinese long products market showed a steady weak trend throughout the past week. The low inventory and high ex-factory prices are the major sources of support for the current market price. Since the export refund policy announced on September 14 will come into effect on December 14, steel mills and exporters are trying their best to complete export contracts before the deadline. Nevertheless, with the additional 10 percent tariff on semi finished steel, Chinese long products still retain the eight percent export tax rebate rate in the new export refund policy. This contributes greatly to the strong price competitiveness of Chinese long products in South East Asia market.