Local Chinese longs prices still fall sharply, is bottom close?

As of March 18, average Chinese domestic rebar and wire rod prices have continued their strong decreases (similar to the previous week) amid slowly declining inventory levels and raw material price declines.

The average rebar price has declined by RMB 137/mt ($19.3/mt) compared to March 11, while the average 6.5 mm HPB 300 wire rod price has seen a drop of RMB 160/mt ($22.5/mt). Rebar prices have edged down by RMB 3/mt compared to Friday, March 15.  

During the given week, purchase volumes from downstream users have increased gradually, but insufficiently given the high inventory levels of rebar and wire rod. Prices of raw materials, including coke and iron ore, have decreased, weakening the support for rebar and wire rod prices from the cost side.

At the same time, steel outputs have declined slowly, raising hopes that prices may be close to the bottom. The demand for rebar and wire rod may continue to recover, while outputs may not decrease significantly and so the market fundamentals are unlikely to change rapidly. It is expected that rebar and wire rod prices in the Chinese domestic market will fluctuate in a narrow range in the coming week.

As of March 18, rebar futures at Shanghai Futures Exchange are standing at RMB 3,513/mt ($495mt), decreasing by RMB 93/mt ($13/mt) or 2.6 percent since March 11, while up 0.26 percent compared to the previous trading day, March 15.  

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 7.0943