Average offer prices for ex-China wire rod have remained stable over the past week amid the prevailing cautious sentiments among market players as the recent positive stimulus announcements have failed to boost the market, with weak demand persisting. At the same time, the mood in the Southeast Asian market has remained bearish and traders have still been ready to provide low offers.
Offers for ex-China wire rod from second-tier mills have been heard at $520-540/mt FOB, moving sideways compared to August 24. Prices from the first-tier producers have been at $550-560/mt FOB. Since Chinese steelmakers are expected to implement production restrictions up to the end of the year, they have been unwilling to cut offer prices in the export market, but in general the mood is still bearish so far.
“During the given week, cautious sentiments have prevailed among market participants. Though Chinese policymakers have issued some stimulus policies, including the extension of the favorable individual income tax and the reduction in stamp duties, there are three typhoons [Saola, Haikui and Kirogi] going to affect China, which will weaken the demand for wire rod and exert a negative impact on prices in the near term. The real estate industry has remained weak, resulting in pressure from the downstream sector,” a trader said.
Though Chinese mills’ offers are still heard at the high levels of $540-550/mt CFR the Philippines, traders have remained aggressive, having no positive expectations, at least for the coming few weeks. In particular, open origin offers from Chinese traders have been at $520-530/mt CFR Manila, versus $525/mt CFR at the lowest last week, depending on grade, “but the lowest price for non-VAT sales from Chinese sellers are at $518-520/mt CFR,” a Manila-based source said.
Offers for ex-Indonesia wire rod to Thailand have been at $535/mt CFR, down by $10/mt in the past ten days.
As of Thursday, August 31, rebar futures at the Shanghai Futures Exchange are standing at RMB 3,740/mt ($521/mt), increasing by RMB 52/mt ($7.2/mt) or up 1.4 percent since August 24, while rising by 1.27 percent compared to the previous trading day (August 30).
$1 = RMB 7.1811