Local Chinese longs prices retreat, futures drop sharply, stocks still high

During the week ending March 23, average prices of Chinese domestic rebar and wire rod have moved down. Though local producers have been expecting a further demand improvement amid increased construction activities in China, sentiments have been hit by concerns over the global economy due to the spread of the coronavirus.

During the given week, rebar and wire rod prices in China have increased by RMB 27/mt and RMB 20/mt respectively, while in dollars the decline has been more than $10/mt as the national currency weakened visibly. At the same time, supply in the local Chinese market has increased, while inventories have been consumed smoothly, resulting in decreases in inventory levels. However, inventory is still at relatively high levels.

Due to the rapid spread of the coronavirus worldwide, the global financial markets have taken a dive, exerting a negative impact on rebar futures prices in China. On March 23, rebar futures contract (2005) offers closed at RMB 3,400/mt ($479.3/mt) at Shanghai Futures Exchange, down RMB 105/mt ($14.8/mt) since Friday and RMB 153/mt ($21.6/mt) or by 4.3 percent since March 16, reflecting the pessimistic view of the future prospects for the domestic market amid the worsening financial market situation worldwide.

Jiangsu Province-based Shagang Group, China’s largest private steelmaker, has raised its list prices for its offer prices for rebar, high-speed wire rod and bar-in-coil by RMB 50/mt ($7.05/mt), RMB 70/mt ($9.9/mt) and RMB 70/mt ($9.9/mt) for March 21-31, reflecting its upbeat view of the market prospects.

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 7.094