Long product prices began to fall

SteelOrbis Shanghai The long-term large inventory and sluggish transaction volume greatly influenced traders' attitudes and led to a price fall in China's major markets last week. Having expected to see a vivid market in Spring with the beginning of construction activities, the market players stockpiled long products during the Chinese New Year holiday and led to a high inventory. However the demand has not picked up yet. Although market players have held optimistic attitudes towards the future of the market and tried to raise their prices in every opportunity, depleting the existing inventory does not seem quite possible due to the bearish demand. Adding the price decrease in flat products and semi-finished steel products, the prices of long products have finally started declining. The average price of 20 mm HRB 335 rebar in three major local markets decreased RMB 43/mt ($5) weekly to RMB 2,960/mt ($368), and that of 20 mm HRB 400 rebar decreased RMB 27/mt ($3) to RMB 3,043/mt ($378). The average price of 6.5 mm Q235 high speed wire rod declined RMB 20/mt ($2) to RMB 3,023/mt ($376). Apart from the high inventory, low production cost and the bearish sales figures facing the large increase in long products output also battered market players' confidence. The data disclosed on March 13 by China Iron and Steel Association (CISA) show that rebar output increased 22.7 percent year on year to 6.15 million metric tons, and wire rod output increased 17.1 percent to 4.88 million metric tons in February. In general terms, long product prices will inevitably continue recording declines. However, there will not be a sharp fall as the current prices are not very high.