Increase in cost and demand to drive up long product prices

SteelOrbis Shanghai Although long product prices did not see a sharp increase due to the current high inventory facing bearish demand in all markets, an increase is inevitable in the near future because of increased production costs. In fact, the transaction volume went up slightly last week, but the prices showed signs of decline. The average price of 20 mm HRB 335 rebar in three major markets -Shanghai, Beijing and Guangzhou- climbed up RMB 3/mt to RMB 2,883/mt ($358), 20 mm HRB400 rebar was down RMB 17/mt ($2) to RMB 2,990/mt ($371), while that of 6.5 mm Q235 high speed wire rod was down RMB 10/mt ($1) to RMB 2,967/mt ($369). Some traders slightly reduced their offer prices to provide cash flow and some of them tried to decrease their inventories to avoid the risks, which led to an overall decline in market prices. At the beginning of last week, Shanghai market saw continuous minor increases in market prices as well as transaction volume. But the increase in transaction volume was not as much as traders’ expected. Therefore, traders started to cut prices at the end of last week. The prices in Beijing were already bearish when they experienced a sharp fall. Guangzhou market saw a slow downward price trend. Traders stated that the transaction volume went up slowly despite the minor downward price trend. The inventory went down to some degree. For example in Shanghai, the rebar inventory went down 7,150 metric tons to around 539,850 metric tons. On the other hand, semi finished steel prices saw obvious increase after the holidays. The semis prices in Tangshan went up by RMB 90-120/mt ($11-15). Therefore, the cost of rolling mills that produce rebar products have climbed considerably.