Local Chinese longs prices down week on week, support starts to come from iron ore

During the week ending December 7, average Chinese domestic rebar and wire rod prices have moved down amid slack demand and the increased supplies circulating from northern China to southern China. Though bearish sentiments prevail among market players, surging iron ore prices have provided support longs prices from the cost side today, Monday.  

Over the past week, the average rebar price has decreased by RMB 70/mt, while the average wire rod price has declined by RMB 63/mt. The rebar futures prices have fluctuated within a limited range, while moved up by 2.55 percent on December 7. This has provided support to rebar spot prices in China - which have risen by RMB 24/mt ($3.7/mt) on Monday compared to Friday. Up to mid-December, construction activities in China will likely remain at decent levels as construction will be speeded up ahead of the arrival of severely cold weather conditions. Meanwhile, the inventory of rebar and wire rod has decreased, bolstering prices in the spot market. Tight supply has also provided a certain degree of support for prices.

Since the end of the year is approaching, tight liquidity may weaken the support for the rebar and wire rod market.

On December 7, rebar futures contract (2101) offers closed at RMB 3,980/mt ($609/mt) at Shanghai Futures Exchange, up RMB 74/mt ($11.3/mt) or by 1.9 percent since November 30 and up by 2.55 percent compared to the previous trading day, signaling market players’ bullishness towards the future market prospects amid surging iron ore prices.

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 6.5362