Continuous rise in China's long products prices

SteelOrbis Shanghai Due to the optimistic atmosphere pervading the market, Chinese long products prices continued to go up over the past week. Trading performances remained sluggish, however, while market inventory increased. On February 2, 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) to RMB 3,330/mt ($429), while that of 20 mm diameter HRB 400 rebar was up RMB 20/mt ($3) to RMB 3,443/mt ($444). Meanwhile, the average price of 6.5 mm Q235 high speed wire rod was up RMB 40/mt ($5) to RMB 3,380/mt ($436). Currently, both Chinese mills and traders are predicting a rise in the market after the holiday. Therefore, in spite of the bearish commercial activity and declining downstream demand, the traders are choosing to hold onto their products, leading to rising prices and a low trading volume. Since the migrant workers began to return home last week, most construction sites have stopped work, resulting in flat demand for longs. It was also during the past week that the mills set their prices for February. Generally speaking, except for the slight reductions made by the leading mills in the southwest, the mills in the other regions all hiked their prices. Especially noteworthy was the remarkable price increase announced by Shagang. Boosted by the hike in ex-factory prices, the market prices also saw an overall climb. Moreover, with the increase in supplies and the bearish demand, construction steel inventory went up overall, particularly in Hangzhou, Shanghai and Beijing. It is expected that China's long products market will continue its stable trend before the holiday. If market inventory does not climb too quickly, then the market is likely to have brilliant prospects ahead for the first half of 2007.