Local Chinese longs prices up slightly ahead of holiday as output curbs loom

During the week ending January 24, average Chinese domestic rebar and wire rod prices have moved up, supported by increase in futures prices, production cuts in some regions like Tangshan which started today, January 24, and with more restrictions expected in February. This is happening even despite the slowdown of demand and the deserted market ahead of the holiday.   

During the given period, the average rebar price has risen by RMB 23/mt, while the average wire rod price has improved by RMB 20/mt.  

Chinese rebar and wire rod prices have moved on an increasing trend amid the declining output and, what is more important, due to expectations of more severe cuts in February due to the Winter Olympics, which starts from February 4. In advance, the Tangshan authorities have announced steel production curbs from January 24 to improve air quality.

However, inventory levels of rebar and wire rod have increased ahead of the long Chinese New Year holiday (January 31-February 6). Currently, most market players have left the market, signaling prices may move sideways in the coming week.

On January 24, rebar futures contract (rb2205) offers closed at RMB 4,665/mt ($736/mt) at Shanghai Futures Exchange, up RMB 112/mt ($17.7/mt) or by 2.46 percent compared to that recorded on January 17.

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 6.3411