Local Chinese longs prices down RMB 150/mt, demand weaken than foreseen

During the week ending March 14, average Chinese domestic rebar and wire rod prices have moved down significantly, by RMB 150/mt or $24/mt on average.

During the given period, both the average rebar and wire rod prices have lost RMB 150/mt, while since Friday the rebar price has dropped by RMB 60/mt or $9.5/mt.  

Rebar and wire rod prices in China have moved down sharply amid the big declines seen in rebar futures prices on March 14. The inventory levels of rebar and wire rod have increased in the given week, while demand has not improved to the level that market players had expected, partly due to the restrictions aimed at preventing the spread of another wave of Covid-19 as the number of infection cases has started to rise once again.

Meanwhile, the tense situation in the global market has exerted a negative impact on the rebar and wire rod market. Declining iron ore prices has resulted in relatively stable production costs, which will stimulate steelmakers’ willingness to produce. However, the worsening of the Covid-19 pandemic in China weakens the support for rebar and wire rod prices. It is thought that rebar and wire rod prices in the Chinese domestic market will likely bottom up in the coming week, though rising by a limited margin.

On March 14, rebar futures contract (rb2205) offers closed at RMB 4,695/mt ($739.4/mt) at Shanghai Futures Exchange, down RMB 399/mt ($62.8/mt) or by 7.8 percent compared to March 7.

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 6.3506