Average offer prices for ex-China wire rod have moved down sharply over the past week, following losses in the local and futures markets. As a result, the tradable prices in the Southeast Asian market have also declined significantly, though this has failed to accelerate sales this week. At the same time, ASEAN-based exporters have not been in a hurry to join the race, preferring still to offer only to distant markets, or they have been withdrawing their offers.
Offers for ex-China wire rod have been heard at $540-560/mt FOB, moving down by $35/mt on average compared to April 20. Though official offers from the first-tier mills in China have been at $570/mt FOB, from mills in Tangshan the level of $550/mt FOB has been officially confirmed as easily tradable and negotiable.
“During the given week, demand for wire rod in China has slackened, negatively affecting prices. Wire rod producers’ profitability has shrunk, pushing steelmakers to implement production reductions, which may bolster wire rod prices in May, though traders and downstream users’ unwillingness to build up stocks ahead of the Labor Day holiday [April 29-May 3] may exert negative pressure,” an international trader said.
Offer prices of ex-China wire rod have been heard at $550-560/mt CFR the Philippines, while hardly any deals have been heard. “The $550/mt CFR is tradable from traders doing non-VAT sales, but no one will buy, I don’t think that after the holiday the market will be much better,” a Manila-based trader said. The reference wire rod price in Southeast Asia has fallen by $30/mt over the past week from $580/mt CFR on average.
Ex-ASEAN wire rod prices have hardly been heard this week, with bearish sentiments prevailing among market players. “They [ASEAN mills] may be better off with Europe in the meantime, Asia is a blood bath,” a source said. Indicative levels for ex-Malaysia and ex-Indonesia wire rod have been reported at $590-600/mt FOB.
As of Thursday, April 27, rebar futures at the Shanghai Futures Exchange are standing at RMB 3,691/mt ($533.4/mt), decreasing by RMB 223/mt ($32.2/mt) or down 5.7 percent since April 20, while declining by 0.3 percent compared to the previous trading day (April 26).
$1 = RMB 6.8987