Local Chinese longs prices still lose ground amid further inventory increases

As of March 4, average Chinese domestic rebar and wire rod prices have moved down further due to increasing inventory levels, signaling that the demand recovery after the holiday remains slower than expected and production cuts have been not that big to solve the problem.

The average rebar price has declined by RMB 63/mt ($8.9/mt) compared to February 26, while the average 6.5 mm HPB 300 wire rod price has also seen a drop of RMB 63/mt, Rebar prices have edged down by RMB 30/mt compared to Friday, March 1.

During the given week, rebar and wire rod prices in the Chinese domestic market have continued their downtrend, even though overall activity in the market has improved compared to the first week after the holiday. Inventory levels have risen further, exerting a negative impact on the market. Raw material prices (import iron ore and local coking coal) have declined, positively affecting steelmakers’ profitability, which will result in steel output rises in the near future. Demand for rebar and wire rod from downstream construction sites may improve more slowly than market players had expected, keeping prices at relatively low levels for a while. It is expected that rebar and wire rod prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week.

On March 4, rebar futures contract (rb2405) offers closed at RMB 3,762/mt ($528/mt) at Shanghai Futures Exchange, increasing by RMB 13/mt ($1.8/mt) or 0.35 percent compared to February 26, while decreasing by 0.69 percent compared to the previous trading day (March 1).

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 7.102