Average offer prices for ex-China wire rod have edged down over the past week after the previous rises as demand in China has been even weaker than before and support from the government announcements to limit oversupply has eased. At the same time, lower non-VAT offers from China are still seen in the market even despite rumors that the market will be more controlled by the end of the year.
Offers for ex-China wire rod from second-tier mills have been heard at $470-480/mt FOB, decreasing by $5/mt on average compared to that recorded on July 24, while reference deal prices have been heard at $465-470/mt FOB. Offers for non-VAT wire rod have been still heard at $450-455/mt FOB or so.
“Following rises recorded over the past few days, wire rod prices China [local market] have seen big decreases as some market players chose to lock in profits and exit the market at the current stage,” an international traders said. This round of price increases has been boosted by government’s policy support (and the decision to fight overcapacity in coking coal and steel sectors), while the demand from downstream users has not seen significant improvement yet. Recently, floods in Beijing exerted a negative impact on construction activities, weakening the demand for wire rod. The military parade on September 3 will lead to the production halts in August in Beijing and surrounding regions, including Tianjin city and Hebei Province, which will bolster wire rod prices. It is expected that wire rod prices in the Chinese domestic market may fluctuate within a limited range in the coming week.
Offer prices of Indonesia Dexin wire rod have been heard at $495/mt FOB, for October shipment, moving up by $5/mt compared to July 24, but in general ex-ASEAN wire rod prices have been assessed as stable and the current Indonesian offer is for the European market, which is expected to be slow in August and may open at higher levels by the end of next month. Offer prices of ex-Malaysia SAE1006 wire rod have been heard at $470-480/mt FOB, remaining stable on average compared to July 24, and offer prices of ex-Vietnam CB300V-D6 wire rod are at $530/mt FOB.
In Southeast Asia, the tradable level for SAE1008 6.5 mm wire rod has been heard at $470-475/mt CFR, this is up from the majority of the previous contracts signed at $450-470/mt CFR two weeks ago, but down from offers seen at $470-490/mt CFR last week. The current workable level represents offer prices from Chinese traders for non-VAT exports. Such offers still exist even though this business is expected to be more controlled with the new system scheduled for October 1.
As of July 31, rebar futures at Shanghai Futures Exchange are standing at RMB 3,205/mt ($448/mt), decreasing by RMB 89/mt ($12.4/mt) or 2.7 percent since July 24, while down 4.19 percent compared to the previous trading day, July 30.
$1 = RMB 7.1494