Chinese longs markets rebound rapidly

SteelOrbis Shanghai Following the three months long adjustment period since Spring Festival, Chinese rebar prices entered into a new period last week. Currently, international and domestic steel markets are both in upward trend with the increasing domestic demand. The result of international iron ore price negotiations also increased the cost of the entire steel industry. Therefore, Chinese long product prices are in an upward trend, which is expected to improve further. Driven by the ex-factory price increases of leading steel mills, prices in eastern and southern China saw dramatic increases last week. Later, influenced by traders' desires of making profits, prices in some markets went down with brisk commercial activities towards the end of last week. Driven by the strong demand in international market, Chinese semis prices saw dramatic increases last week. The export quotations of common carbon billet of some semis producers in Tangshan reached $405/mt, higher than the rebar prices in some domestic markets, which even resulted in the phenomena that “rebar trading is not as profitable as billet trading”. Looking at eastern China last week, we see that, Shagang hiked its rebar and wire rod ex-factory prices RMB 200/mt ($25) and RMB 150/mt ($19) respectively, pushing the prices in the region up rapidly. But the “wait-and-see” attitudes held by end-buyers due to the sudden price increase influenced the commercial activities. In addition, current inventory costs in all regions are at a low level and traders are eager to sell their products with any profit they can obtain, which has also led to price decline. However, on Friday afternoon, some traders began to purchase products from the steel mills over higher ex-factory prices which began putting pressure on market prices. The market conditions in southern China are similar with that in eastern China. The hike in ex-factory prices of Guangzhou Steel and Shaoguan Steel drove up the market prices. Then the prices slightly went down in the middle of last week, but continued to increase later. With the northern market maintaining strong upward trend, prices in Beijing rose continuously throughout last week. The anticipation that the five steel mills in northern China would increase ex-factory prices considerably and the rebound in trade activities were influential in the increase.