Considerable decrease in Chinese wire rod prices after holiday

SteelOrbis Shanghai Influenced by the sluggish demand in both international and domestic markets, Chinese long product prices showed weakness, with a remarkable decrease seen in wire rod prices. Against the background of bearish commercial activity, inventory increased in every local market. On October 13, the average price of 20 mm diameter HRB335 rebar in China's three major markets - Shanghai, Beijing and Guangzhou - was down RMB 13/mt ($2) to RMB 3,127/mt ($395), that of 20 mm diameter HRB 400 rebar was up RMB 7/mt ($1) to RMB 3,240/mt ($410). The average price of 6.5 mm Q235 high speed wire rod decreased RMB 50/mt ($6) to RMB 3,243/mt ($410). Due to the curbed exports and bearish domestic market, the five leading mills in northern China had to alter their wire rod pricing policies for October: the settlement prices will now be determined by the actual market prices instead of the fixed price list. Influenced by this policy, traders in the Beijing market sharply lowered their wire rod prices so as to stimulate sales and stop further inflow of supplies from other regions. The price of 6.5 mm Q235 high speed wire rod dropped RMB 120/mt ($15) compared with the prices before the holiday. In comparison, the decrease in rebar prices is relatively small. Affected by this, long product prices in northern China and in the northeastern region also saw a decline at different levels. As regards the market in eastern China, Shagang continuously hiked its ex-factory prices of rebar while it kept its wire rod prices unchanged. Due to this good news, the market decrease is relatively small. However, the sluggish commercial activity has destroyed the confidence of the traders. Thus, the market is on a downward trend on the whole. In southern China, driven by the price hikes of the leading steel mills, market quotations stepped up slightly. Then under the impact of the market decrease in Shanghai and Beijing, prices again became stable. The current demand situation gradually reflects more and more the effects of macro-control measures on fixed assets investment. Furthermore, as the northeastern region enters the winter period, construction projects begin to come into an end, also contributing to the shrinking demand. More importantly, in recent days the American market has been experiencing a weak trend, with inventory at a high level. The local steel mills began to lower their ex-factory prices of rebar. This curbed Chinese exports of wire rod and resulted in an increase in Chinese domestic supply. Inevitably, the Chinese long products market will decline in the short term.