Chinese long products market remained stable

SteelOrbis Shanghai Failing to continue the upward trend, the southern and eastern China long products market saw stable movement last week; while market in northern regions rebounded by a small step, with trading volume neutral week on week. Meanwhile, rebar inventory increased dramatically, with slight rise in wire rod. By the end of the trading on December 22, the average price of 20mm diameter HRB 335 rebar in the three major Chinese markets - Shanghai, Beijing and Guangzhou - was up RMB 10/mt ($1) to RMB 3,127/mt ($400). 20mm diameter HRB 400 rebar in the same period was down RMB 7/mt ($1) to RMB 3,270/mt ($419). The average price of 6.5mm Q235 high speed wire rod was up RMB 10 ($1) to RMB 3,173/mt ($406). Shougang, Tangshan Steel and some other mills reduced their supplies recently because of overhauling. This had decreased inventories in major northern markets and market prices began to rebound on December 21. The five leading mills in northern China will soon announce the ex-factory prices for January. If market prices soar too fast, the ex-factory prices will be raised to a high level, which may cut down traders' profits. The local traders therefore made efforts to control the price increase and market did not see any remarkable rise. Meanwhile, the steady price movement of semi finished steel prices in northern China and continuous decline in long products prices for some time, curbed the production release of rolling mills. If the market inventory does not get enough supplement in short term, the slight upward trend may last in the coming days. Early last week, the eastern China market saw small price increase, but with normal trading performance. Since the transportation conditions improved recently, supplies from northern to eastern increased gradually. With the rising market inventory, prices stopped climbing. After the continuous sharp increase over the past weeks, traders in southern regions lack the momentum to pull up prices any further. The market supply is not strong with a little supply from northern, but the market supply is still equal to the level of the previous week due to the normal demand. In the short run, market will maintain the current stable trend. However, with the improved transportation, southern market may turn to weak and steady trend.