Offer prices for ex-China and ex-Indonesia wire rod have edged down over the past week amid pressure from weak demand, which has been falling faster than supply.
Offers for ex-China wire rod have been heard at $495-505/mt FOB, down $5/mt on average compared to July 23. The lowest tradable prices have been heard at $490-495/mt FOB, mainly for the regional market.
During the given week, wire rod production declined, while inventories continued to rise, signaling that demand has shrunk more than supply. Traders have been unwilling to build up stocks, showing that demand has not seen significant improvement. Recently, coke and iron ore prices have moved down, weakening support for wire rod prices. Many regions of China have been affected by extreme high temperatures, which will continue to exert a negative impact on demand for wire rod.
On July 30, China's Politburo meeting was held, stating that more proactive fiscal policies and moderately accommodative monetary policies should be implemented. Meanwhile, it called for fully leveraging the effectiveness of existing policies and promptly planning and rolling out pragmatic and effective incremental policies. Market sentiment has been bolstered to a certain degree, but there has been no immediate support for the steel market. Moreover, futures fell faster today (for major steel products and iron ore), signaling that weak demand and poor profitability are putting greater pressure on sentiment.
It is expected that wire rod prices in the Chinese domestic market will soften slightly further in the coming period.
Wire rod offer prices from Indonesia's Dexin Steel are at $480/mt FOB for September shipment, down by $5/mt over the past week.
In Southeast Asia, most offers for wire rod have been heard at $505-510/mt CFR, but small deals have also been heard at $500-505/mt CFR.
As of July 30, rebar futures at the Shanghai Futures Exchange stand at RMB 3,014/mt ($444/mt), decreasing by RMB 71/mt ($10.5/mt), or 2.3 percent, since July 23, while falling 1.73 percent compared to the previous trading day, July 29.
$1 = RMB 6.7892
