SteelOrbis Shanghai
Influenced by the upcoming Spring Festival, the Chinese long products market saw a flat performance over the past week, with bearish commercial activity and growing market inventory. Moreover, the mills continued to raise their ex-factory prices, resulting in rising export quotations.
On February 9, the average price of 20 mm diameter HRB 335
rebar in the three major Chinese markets - Shanghai, Beijing and Guangzhou - was down RMB 10/mt ($1/mt) to RMB 3,320/mt ($428/mt), while that of 20 mm diameter HRB 400
rebar remained constant at RMB 3,443/mt ($444/mt), equal to the level of the previous week. Meanwhile, the average price of 6.5 mm Q235 high speed
wire rod has decreased RMB 7/mt ($1/mt) to RMB 3,373/mt ($435/mt).
As the Spring Festival draws near, migrant workers have left the
construction sites and returned to their hometowns, leading to the sharp slump in market demand. Furthermore, most traders have also ceased their activity, resulting in the slack levels of
trading performance. Prices still maintained their stability. Due to the continuous arrivals of previously-ordered supplies, most regions saw a steady increase in inventory. However, compared with previous years, the current inventory seems lower than the seasonal norm.
Except for some key building projects, almost all
construction sites will stop work for the next three weeks, with demand thereby dropping dramatically. On the other hand, the steel mills will maintain normal
production during the period in question. The post-festival market will largely depend on the extent of the climb in market inventory during the next three weeks. Nevertheless, in the present situation, due to the good exporting performance, inventory is unlikely to overrun the level of the previous year. Therefore,
China's long products prices will remain on an upward trend after the festival.
Since
China began to levy tariffs on its
semis exports, export quotations of semi finished steel have climbed up continuously. As a result, the
production costs of rolling mills in
Southeast Asia have jumped up by a big step, further boosting the price advantage of Chinese long products. Furthermore, the Chinese mills have already received many inquiries from abroad, and this pushes them to make continouous upward adjustments to their export quotations. At present, the export quotation of SAE1008 6.5 mm
wire rod shipped in April is at $440-450/mt FOB, up $10/mt compared with the level of two weeks ago. In addition, the quotation of HRB335 16-25 mm
rebar is also up $10/mt to $430-440/mt FOB.
With regard to the international market, strong movement continues in Asia,
Europe, and the
Middle East. The US market has stopped its slide and is showing evidence of a rebound. If stocks are consumed in considerable quantities in the upcoming period, then an overall rising tendency will be inevitable for the global market. Once
China cancels the export rebate for long products, prices in the world's major markets,
China excepted, are likely to mark new heights.