Climbing trend continues in China’s long products market

Over the past week, the Chinese long products market has retained its upward movement, with an obvious increase seen in inventory levels in the Guangzhou market, and certain decreases registered in  Shanghai and Beijing market inventories. Given the supports for the mills' prices, i.e the steel futures market and raw materials market, the domestic traders that are generally confident in the future trend of the market, appear in no hurry to sell their materials.

There are several reasons continuously propping up the Chinese construction steel market in recent days. First of all, the local leading mills have successively raised their ex-factory prices; while it is also heard that Hebei Steel Group will sharply increase its prices for January. In this connection, on account of the sharp jump in costs of new arrivals, traders generally intend to hike their sales prices accordingly. Meanwhile, the Chinese steel futures market has moved on an upward trend during the past week, which has enhanced the expectations of price ascension in the domestic construction steel market. Moreover, the rise in the raw materials prices has also contributed to the continuous climb in the steel market to a certain extent.

According to the latest statistics, by the close of business on December 24, rebar inventory in Shanghai reached 492,000 mt, up 20,000 mt week on week; meanwhile, wire rod inventory in Shanghai stood at 102,000 mt, down by 1,000 mt week on week. As a result of the ascended arrivals from other regions, the total inventory of rebar and wire rod in Guangzhou has gone up by 6,000 mt or so compared with the previous week. The rebar inventory in Beijing came to 329,000 mt, up 3,000 mt week on week; while wire rod inventory in Beijing was down 13,000 mt to 44,000 mt.

In the past week, the Chinese mills Kunming Steel, Jiyuan Steel, Guangzhou Steel, Shaoguan Steel, Enan Steel, Shuicheng Steel, Shanxi Jingang, Chongqing Steel and Changye Steel have successively made upward adjustments ranging from RMB 20-50/mt ($3-7/mt) to their prices of wire rod and rebar.

On the raw materials side, following its previous stable movement, the domestic pig iron market stepped up again in the past week, accompanied by normal levels of trading volume; while the scrap market posted an overall rise at the same time. The domestic billet market moved steadily up over the past week, with the market prices in the north increasing by RMB 30-100/mt ($4-15/mt). The quotations of imported ore in China have also jumped to $116-118/mt.

Above all, against the robust costs of raw materials, as well as the positive market expectations, the Chinese long products market is expected to remain on a climbing trend in the coming week.