Local Chinese longs prices bottom up cautiously

As of July 25, average Chinese domestic rebar and wire rod prices have bottomed up week on week, and since last Friday there have also been rises. The futures price increase and some production cuts have bolstered prices, but overall gains have been very cautious as the demand-supply situation has remained unfavorable with consumption remaining limited.

The average rebar price has risen by RMB 63/mt week on week, while the average wire rod price has gained RMB 57/mt. Rebar prices have increased by RMB 40/mt since Friday.

During the given week, domestic rebar and wire rod prices in China have indicated a rebounding trend amid continuous production reductions. Moreover, there may be further declines in outputs of rebar and wire rod, which will bolster their prices.

Futures have also posted rises, supporting spot prices. On July 25, rebar futures contract (rb2210) offers closed at RMB 3,859/mt ($572/mt) at Shanghai Futures Exchange, up RMB 79/mt ($11.7/mt) or 2.1 percent compared to July 18.

However, demand for rebar and wire rod in China has continued to be slack and it is unlikely to change this week, which will exert a negative impact on prices. In addition, traders, who want to sell their inventories, may not increase prices actively in the near future, being afraid that customers, who are cautious, will refuse to buy. It is thought that rebar and wire rod prices in the Chinese domestic market will edge up slightly in the coming week.

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

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 6.7543