Sentiments in the Asian rebar market have been weak during the past week, with the aggravating softening of demand in the ASEAN region, but ex-China prices have posted just small changes amid production cuts.
Official ex-China rebar offer prices are stable at $480-490/mt FOB, but traders have been active offering in the export market with some discounts. In the Chinese domestic market, Tangshan, a major steelmaking hub in north China, has required steelmakers to cut production by 20 percent from July 25-29, and some steelmakers have implemented maintenance works, which have bolstered market sentiments due to the expected decrease in supplies to the market. However, recently, there have been big declines in the financial markets, weakening the support for market sentiments, with rebar futures prices decreasing over the past week. It is expected that rebar prices in the Chinese domestic market will fluctuate within a limited range in the coming week.
The ASEAN region, including Indonesia, Vietnam, and Malaysia, has now entered the southwest monsoon season. Heavy rainfall has slowed down construction activities, directly suppressing demand for long steel products. Meanwhile, the payment cycles for earlier government projects have been extended significantly, leaving many downstream contractors with extremely tight cash flows. With insufficient funds, they have been unable to build up inventories, causing market liquidity to nearly freeze, exerting a negative impact on demand for rebar in the Asian market.
Meanwhile, the offer prices of ex-Malaysia rebar have been heard at $510/mt DAP Singapore, theoretical weight, down by $10/mt over the past ten days. Offer prices of ex-China rebar stand at $505/mt CFR Singapore, for prompt shipment, theoretical weight, down $5-10/mt compared to that recorded on July 17.
In the Hong Kong market, buyers' target price stands at $480/mt CFR, actual weight, decreasing by $10/mt on average compared to July 17, while most offers have been heard at $500-505/mt CFR actual weight.
Average rebar spot prices in China have lost RMB 27/mt ($4.0/mt) compared to July 17, standing at RMB 3,180/mt ($468/mt) ex-warehouse, according to SteelOrbis' information.
As of July 24, rebar futures at Shanghai Futures Exchange are standing at RMB 3,076/mt ($453/mt), decreasing by RMB 36/mt ($3.7/mt) or 1.1 percent since July 17, while down 0.45 percent compared to the previous trading day, July 23.
$1 = RMB 6.7939
