Drop in local market pushes Chinese rebar and wire rod export prices down further

During the week ending August 28, Chinese export offers for rebar and wire rod have moved down by $5-10/mt and by $15/mt, respectively. At present, rebar offers given by Chinese suppliers are at $455-470/mt FOB on actual weight basis, while wire rod offers are at $470-485/mt FOB.

Though the inventory level of rebar has decreased in the given week, the overall output has been at high levels, exerting a negative impact on local prices, and as result, on the export tags as well. At the same time, demand in the local market has not improved, which have pushed local rebar price down further. Domestic HRB400 grade 20 mm average rebar prices in China have decreased by RMB 10/mt ($1.4/mt) today, August 28, and have lost RMB 63/mt ($9/mt) over the week, coming to RMB 3,717/mt ($526/mt) ex-warehouse, including 13 percent VAT.

Negative situation in the local market in China and drop of the export offers has led to increase of competitiveness of the Chinese rebar in the Asian market. Workable prices for Chinese rebar in Singapore have come down to $470-475/mt CFR on theoretical weight basis (equivalent to $460-465/mt FOB on actual weight basis). However, demand has remained weak in Singapore due to enough volumes purchased earlier. In Hong Kong prices for Chinese rebar have gone down to $480/mt CFR on actual weight basis, but there were no deals reported as bids have been still much lower.

Chinese exporters were also not very successful in selling wire rod as tradable level in the Philippines has been heard at $475-480/mt CFR, while Chinese suppliers have been ready to offer similar price just on FOB basis. The official offer prices of wire rod from Alliance Steel in Malaysia have been heard at $475/mt FOB. Meanwhile, traders mentioned the demand for wire rod in Indonesia has remained quiet.

Traders in China mentioned that the downtrend in the international market, not so good performance in Chinese local market and falling iron ore tags have resulted in bearish sentiment among market players toward prospect for the future market. It is expected that rebar and wire rod prices from China will likely edge down further in the coming week.