South Korean distributors of domestic production rebars are having trouble in deciding distribution market prices for rebar products which appear to have lost their reference point.
"Distribution market prices for domestic rebars have been lower than the standard price [ex-works price], and so it is necessary for them to be adjusted to the realistic levels as soon as possible," said a rebar distributor, "If a standard price for rebars is set at KRW 850,000/mt, the distribution market prices should be in a range of KWR 830,000-840,000/mt at least. I feel doubt about the validity of a distribution market price that is always lower than even such a level without any benchmark."
At the end of July, the standard price for domestic high tensile strength steel rebars with 10 mm diameter is KRW 850,000/mt in cash after local steelworks' shrinkage of price discount in their supply to distributors; however, the market price is still in a range of KRW 810,000-820,000/mt. It went up to over KRW 810,000/mt last week but stopped climbing at the level of KRW 810,000/mt this week.
"Distribution market prices for rebars declined to the level of KRW 810,000/mt again this week. Steelworks' will to keep their ex-factory prices is strong, but demand for their products in the market is so weak," said a market participant.
"It is understandable that there are some differences among the transaction prices in the market according to the inventory status or the transaction volume of the related products, but it is indicating the irrationality of the market that demand for the products does not pick up, even if market prices become lower than the standard price by KRW 40,000-50,000/mt."
Particularly, the rebar price negotiation between South Korean rebar makers and constructors for their deals in July and August has not yet been settled, making it more difficult for rebar distributors to find a reference point in setting their selling prices in the market.