Local Chinese longs prices hit new record amid surge in costs and futures prices

During the week ending December 21, average Chinese domestic rebar and wire rod prices have moved up significantly amid surging iron ore prices and continuously rising rebar futures prices.

Over the past week, the average rebar price has risen by RMB 390/mt, while the average wire rod price has increased by RMB 337/mt.

During the given week, outputs of rebar and wire rod decreased slightly, while inventory also decreased, providing support for prices. Rebar futures prices and iron ore futures prices surged on December 21, up by 4.99 percent and 9.68 percent compared to the previous trading day, respectively, even following the announcement by Dalian Commodity Exchange (DCE) that it will adjust the commission charged on iron ore futures contracts as of December 22 amid the overheating of the ferrous metal futures market.  

Approaching the Chinese New Year holiday (February 11-17), downstream construction sites may halt construction in late January, causing some builders to bring forward construction work to the month of December, which will bolster rebar and wire rod prices during the remainder of December. However, market players expect that there will be a downward adjustment in rebar and wire rod prices and so they will adopt a cautious stance.

On December 21, rebar futures contract (2105) offers closed at RMB 4,460/mt ($681/mt) at Shanghai Futures Exchange, up RMB 212/mt ($32.4/mt) or by 4.99 percent compared to the previous trading day and up by 11.8 percent since December 14, signaling market players’ bullish sentiments as regards the future prospects for the rebar market 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 6.5507