Chinese long products market to trend downward again

SteelOrbis Shanghai Influenced by the sharp decrease in inventory, long products prices in eastern and southern China saw a considerable increase over the past week, while markets in the northeastern and northern regions continued to go down because of the sluggish level of commercial activity. On November 10, the average price of 20 mm diameter HRB 335 rebar in the three major Chinese markets - Shanghai, Beijing and Guangzhou - was up RMB 30/mt ($4) compared with November 03, to RMB 3,133/mt ($399), while that of 20mm diameter HRB 400 rebar was up RMB 43/mt ($5) to RMB 3,293/mt ($419). The average price of 6.5 mm Q235 high speed wire rod was up RMB 20/mt ($3) to RMB 3,203/mt ($408). In eastern China, all the local markets saw a sharp drop in rebar inventory. Since many traders in Shanghai and Hangzhou were eager to raise prices, end-users worried that market prices could move up further, leading to an increased trading volume. In southern China, with the good exports situation, Shaoguan Steel and Guangzhou Steel provided a very limited long products supply to the local market; therefore, market inventory was in gradual decline with a continuous increase in prices. In the northeastern region, with the bearish demand, some traders lowered prices by a big margin, driving down market prices on the whole. In northern China, affected by the quick slip of semis prices, traders were eager to sell their products, resulting in a slight decline in actual deal prices. It seems that the market performance in the southern region is stronger than that in the northern region. However, with the increasing arrivals of product supplies, the upward trend will gradually come to an end for the eastern and southern markets. Prices are expected to drop with the rising inventory for next week. All in all, the Chinese long products market will again begin to trend downwards. The latest figures released by the CISA indicate that Chinese rebar and wire rod production reached 7.275 million mt and 6.3604 million mt in October, up 15.8 percent and 18 percent year on year respectively. Their daily production amounted to 234,700 mt and 205,200 mt, up 1.33 percent and down 0.53 percent month on month respectively. In addition, China's monthly rebar production broke the 7 million mt mark for the first time ever.