Rapid decrease for Chinese long product prices

SteelOrbis Shanghai With the announcement of macro-control measures by the government, market players gradually reached an agreement on the downward trend for the future market. Steel mills began to lower the ex-factory prices, traders increased their sales volume, and the end users also reduced the purchases. With the continuous rise in the Chinese long products inventory, the market prices see rapid decrease. By the end of the trading on June 23, the average price of 20mm diameter HRB 335 rebar in Chinese three major markets, Shanghai, Beijing and Guangzhou, is down RMB 70/mt ($9) to RMB 3,243/mt ($405), that of 20mm diameter HRB 400 rebar is down RMB 56/mt ($7) to RMB 3,447/mt ($431). The average price of 6.5mm Q235 high speed wire rod is down RMB 60/mt ($8) to RMB 3,570/mt ($446). Over the past week, the major steel mills in eastern China announced the price policies for the last ten days of June. Shagang slightly hiked the rebar ex-factory price, while the other steel mills all lowered the ex-factory prices considerably. Meanwhile, due to the low market demand and because the traders are active in selling their products, the market prices see overall decrease. With the influence of the rain and the supplies at low prices from small steel mills, prices in southern China sharply decreased over the past week. With the weather turning better for the latter part of the week, the trading volume increased slightly. Due to the relatively high supply of the wire rod from the leading steel mills and the surrounding small steel mills, inventories saw sharp increases. Because of the limited supply of rebar from other provinces, inventories remained unchanged. With the influence of capital pressure and sluggish demand, inventories in northern China see continuous rise with the arrival of new supply, but due to the unchanged ex-factory prices for July from the major five steel mills in northern China, the market prices remained temporarily. However, the market prices and ex-factory prices of local steel mills in northwestern region saw sharp decrease. Meanwhile, due to the sharp decline of demand from Southeast Asia, Chinese long products and semi finished steel exports are therefore restrained. With the massive drop in semi finished steel prices, the support for long products prices is unavailable. Overall, downward trend in Chinese long products market has already formed, which is hard to be changed by the end of August.