Local Chinese longs market on the rise amid sharp hike in billet prices

Monday, 22 March 2021 16:27:38 (GMT+3)   |   Shanghai
       

During the week ending March 22, average Chinese domestic rebar and wire rod prices have edged up. The most increase has been seen today, Monday, as local billet prices have increased much since Friday and rebar producers have been willing to reflect this in their offers. Demand for rebar has not shown the expected improvement yet.

During the given period, the average rebar price in China has gained RMB 67/mt, while the average wire rod price has risen by RMB 70/mt.

Since Friday, March 19, the average rebar price level has added RMB 73/mt or $11/mt, fully offsetting previous losses. This has happened after the sharp rises in local billet prices. According to SteelOrbis’ data, billet spot prices in China increased by RMB 135/mt ($21/mt) over the weekend to RMB 4,653/mt ($714/mt) ex-warehouse on average on March 22.

Rebar and wire rod prices have risen amid the production curbs in Tangshan and maintenance works on steelmakers’ blast furnaces in other regions, which have increased worries about billet availability. As SteelOrbis reported on Friday, the Tangshan government issued a document with new restriction plans for steel producers in the city that will be in place from March 20 until the end of the current year. Seven producers in Tangshan will have to cut emissions by 50 percent from March 20 until June 30, while they will implement emission reductions of 30 percent from July 1 until December 31. Another 16 steel companies will lower emissions by 30 percent for the whole period until the end of the year.

Though demand for rebar and wire rod has improved, it is still not as good as market players expected. Moreover, after the recent price increase, many buyers have been cautious, and so long steel producers have not increased prices by the same high margin as seen in the billet segment.

Since rainy weather has gradually come to an end in eastern China, the demand for rebar and wire rod will be better in the coming weeks. However, the inventory of rebar and wire rod is relatively high, indicating that more time will be needed to consume the inventory in the spot market.

On March 22, rebar futures contract (2105) offers closed at RMB 4,763/mt ($731.6/mt) at Shanghai Futures Exchange, down RMB 24/mt ($3.7/mt) or by 0.5 percent compared to March 15 and down by 0.13 percent compared to the previous trading day (March 19), signaling market players’ cautious sentiments as regards the future prospects for the rebar market.

Average domestic rebar and wire rod prices in China's main markets are presented in the tables below.

Rebar prices in local markets

Spec. (mm) - Category

City

Price (RMB/mt)

Price 
($/mt)

Weekly change 
(RMB/mt)

Weekly change 
($/mt)

25 - HRB400

Beijing

4,660

714.8

80

10.3

Guangzhou

4,940

757.8

40

4.1

Shanghai

4,770

731.7

80

10.3

Average price

4,790.0

734.8

67

8.2

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

 Wire rod prices in local markets

Spec. (mm) - Category

City

Price

(RMB/mt)

Price ($/mt)

Weekly

change (RMB/mt)

Weekly change 
($/mt)

6.5 - HPB300

Beijing

5,310

814.5

90

11.6

Guangzhou

5,160

791.5

40

4.0

Shanghai

4,930

756.3

80

10.2

Average price

5,133.3

787.4

70

8.6

8 - HPB300

Beijing

5,090

780.8

90

11.7

Guangzhou

5,100

782.3

40

4.0

Shanghai

4,900

751.6

80

10.2

Average price

5,030.0

771.6

70

8.6

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

$1 = RMB 6.5191


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