The cost drives up the Chinese long product prices

SteelOrbis Shanghai Strong international market has boosted the semis prices and increased the production cost of wire rod and rebar rollers. In addition, the increase in export volume mitigates the pressure on the domestic markets. Chinese long products prices are expected to maintain the upward trend until global prices begin dropping. The increasing strip steel prices drove up the prices of common carbon billets, while the relatively low rebar prices have suppressed 20 MnSi prices. Currently, common carbon billets in Tangshan are being sold at around RMB 2,800/mt ($347), while 20 MnSi billets are being sold at RMB 2,850/mt ($355). Therefore, semis producers are not willing to produce 20 MnSi products, which is the raw material for rebar. Some of the rebar rolling mills facing difficulty in obtaining 20 MnSi billets have suspended their production. Steel mills have been active in exports thanks to the strong demand from the international market under the softened domestic market condition before. The nationwide market prices started increasing, as the cost of steel mills may keep climbing in the future and the domestic supply may drop. The prices in northeastern and northern China, major longs production bases, went into an upward trend with large ranges. In northeastern China particularly, as the export business of leading local mills such as Beitai and Tonghua Steel are quite good, the mills lifted their ex-factory prices considerably, boosting the rapid price increase in the region. The weather has been getting warmer since mid-March, the demand is gradually picking up as construction sites begin their operations, and the business activity is also catching up. HRB 335 rebar prices in that region are above RMB 3,100/mt ($386) on theoretical basis, becoming one of the markets with the highest prices. Under normal circumstances, rebar prices in northeastern China would be relatively low. On the other hand, prices in eastern and southern China linger at low levels because of high inventories and the low cost of former products. In the latter half of last week, the sharp price increase in northern markets also influenced Shanghai and Guangzhou markets. It should be noted that the capital is rather tight due to the remarkable increase in long products output. Moreover, the macro-economic regulation has some impact on the real estate industry. According to the traders, the number of concluded deals indicates a slight drop from a year ago, and the speed of inventory depletion is quite slow.