China’s longs market opens stronger amid output curbs, billet imports to revive

The China’s local longs market has opened after the holidays over the previous two days at a stronger note with spot rebar prices up more than $30/mt in a weekly comparison. In addition, domestic billet prices in China have been slightly up from late last week, which may provide certain support to the import billet prices despite earlier expectations.

Average rebar price level in the Chinese local spot market has added RMB 220/mt over the past week, reaching RMB 5,790/mt ex-warehouse, according to SteelOrbis. The most part of this hike has been seen today, on September 22, when rebar tags have jumped by RMB 173/mt or $27/mt since the last working day late last week.

Average wire rod prices in China have gained $27.7/mt over the week.

The recent hike in the local long steel market in China has been connected with lower production and expectations of even tighter restrictions by the end of this year. Rebar output in China dropped by 4.3 percent month-on-month and 16.1 percent year-on year to 20.123 million mt in August, according to China’s National Bureau of Statistics (NBS). For now, the restrictions in the large provinces like Hebei and Jiangsu are the same as announced early this month, but starting from early to middle of October some additional output cuts are expected.

The support to the spot prices has also come from futures hike. The rebar futures at Shanghai Futures Exchange has increased to RMB 5,656/mt ($874/mt), up by RMB 161/mt ($25/mt) from the previous working session on September 17.    

In such a situation, local billet price in Tangshan has been at RMB 5,230/mt ($808/mt), up by RMB 20/mt ($3/mt) from level last Friday. This level corresponds to $715/mt, excluding 13 percent VAT.

Before the holiday, the highest bids for import billet to China were at $705/mt CFR, but due to weaker sentiments early this week and falling iron ore prices, Chinese traders have been waiting for deals at “$695/mt CFR top,” a source said yesterday. But following the recent hike in rebar futures and firm local billet tags, the tradable level for imported billet in China has returned to $705-710/mt CFR. Offers have been rare so far - at $705-720/mt CFR mostly. Buying activity in the import billet segment may revive this week as the current price levels could be acceptable for a number of sellers.

Rebar prices in local markets

All prices include 13 percent VAT and all prices are ex-warehouse.

 Wire rod prices in local markets

All prices include 13 percent VAT and all prices are ex-warehouse.

$1=RMB 6.469