Decline continues in Chinese longs markets

SteelOrbis Shanghai Chinese long product prices saw a rapid decrease throughout last week, while the trading volume is still at a low level due to the shrunk demand. The market inventory is increasing, while the traders are not willing to make purchases. Therefore, steel mills' ex-factory prices have seen an overall decrease with rising inventories. On June 30, the average price of 20 mm diameter HRB 335 rebar in China's three major markets, Shanghai, Beijing and Guangzhou was down RMB 136/mt ($17) week on week at RMB 3,107/mt ($388), and that of 20 mm diameter HRB 400 rebar was down RMB 107/mt ($13) at RMB 3,340/mt ($418). The average price of 6.5 mm Q235 high speed wire rod was down RMB 160/mt ($20) at RMB 3,410/mt ($426). Construction activities will decrease by a large scale in July, because of the summer season and stormy weather in South China especially. Market players are becoming pessimistic about the future of the market with the demand decreasing further. Rebar prices were already at a low level; therefore, the cost of keeping inventories is high. Meanwhile, semi finished steel market also tends to remain in a stable course. Therefore, it is not quite possible for long steel market prices to see a rapid decrease this week and next week. Yet, the decrease is expected to continue little by little because of the dropping trend in the entire domestic steel market. Meanwhile, Chinese government postponed the announcement of tax rebate reduction on steel exports for one more month. Some sources report that the tax rebate would be reduced to 8 percent instead of the previously mentioned 5 percent. The government is preparing a policy covering not only steel products, but entire export items from every industry. The postponement in the announcement of the policy is due to some conflicts regarding the tax rebate reduction of textile products, sources reported.