Average offer prices for ex-China wire rod have edged down slightly over the past week, but this has been assessed more as a correction and not as a sign of a trend reversal. In fact, China’s loose monetary policy and rather positive outlook for February are likely to keep prices stable or result in further rises.
Offers for ex-China wire rod have been heard at $465-475/mt FOB, edging down by $5/mt on the high end compared to January 8. The tradable prices have been heard at $465-470/mt FOB.
Zhou Lan, deputy governor and spokesman for the People's Bank of China stated in a State Council Information Office press release on January 15 that interest rates for various structural monetary policy tools will be cut by 0.25 percentage points, with one-year re-lending rates for various categories reduced to 1.25 percent, and interest rates for other maturity brackets adjusted accordingly. The PBOC’s move will provide support for market sentiments and will positively affect finished steel prices.
Currently, supply of wire rod in the Chinese domestic market has been tight, exerting a positive impact on prices. However, cautious sentiments prevail among market players during the traditional cold winter offseason, weakening the wire rod market. It is thought that wire rod prices in the Chinese domestic market will likely move sideways or post small increases in the coming week.
Wire rod offer prices from Indonesia’s mill have been heard at $490/mt FOB, increasing by $10/mt over the past week. The producer is holding a positive outlook, not having much March shipment allocation left for exports.
In Southeast Asia, mainstream tradable prices of SAE1008 6.5 mm wire rod have been heard at $485-495/mt CFR, similar to last week. But buyers’ price ideas have increased by $5/mt to $475-480/mt CFR.
As of January 15, rebar futures at Shanghai Futures Exchange are standing at RMB 3,160/mt ($451/mt), decreasing by RMB 8/mt ($1.1/mt) or 0.25 percent since January 8, while down 0.13 percent compared to the previous trading day, January 14.
$1 = RMB 7.0064
