Local Chinese long prices retreat due to futures, billet losses

During the week ending April 12, average Chinese domestic rebar and wire rod prices have moved down, following the drop in prices of futures and billets in China since last Friday, after the government’s call for the control of the raw material costs of steel materials for end-users.

In total, the average rebar price has lost RMB 57/mt, while the average wire rod price has declined by RMB 27/mt within the past week. While prices were fluctuating in the higher end of the range during most of the week, they have indicated declines today, Monday. For instance, the average price of rebar in China has lost RMB 63/mt compared to Friday, according to SteelOrbis’ data.

Rebar futures prices in China recently moved up first while edging down later, especially after Tomb-Sweeping Day, exerting a negative impact on rebar and wire rod prices. On April 12, rebar futures contract (2105) offers closed at RMB 4,985/mt ($760/mt) at Shanghai Futures Exchange, up RMB 14/mt ($2.1/mt) or by 0.28 percent compared to March 29, but down by 1.99 percent compared to the previous trading day (April 9), signaling market players’ bearish sentiments towards the future prospects for the rebar market.

The Chinese steel futures slump on Monday has been attributed to the latest call made by Premier Li Keqiang to control raw material prices to ease the pressure on end-users. "The overall economy and operations of enterprises have continued to recover, but surging international commodity prices have exerted great pressure on companies' costs," Xinhua news agency cited Li Keqiang as saying on April 11.

In addition, billet prices in Tangshan have lost as much as RMB 140/mt ($21/mt) since Friday, falling to RMB 4,920/mt ($750/mt) ex-works.

The good weather in the coming period will be good for construction activities and will provide some support for rebar and wire rod prices and will prevent sharp drops in prices, market sources believe. But the current high levels of rebar and wire rod prices have made market players cautious about concluding purchases, and so it is possible that rebar and wire rod prices in the Chinese domestic market will move down slightly before another rebound.

Rebar prices in local markets

All prices include 13 percent VAT and all prices are ex-warehouse.

 Wire rod prices in local markets

All prices include 13 percent VAT and all prices are ex-warehouse.

$1 = RMB 6.5578