Local Chinese longs prices down slightly amid protectionism talk, some rebound awaited

During the past week ending March 3, average Chinese domestic rebar and wire rod prices have moved on a downtrend amid decreasing rebar futures prices and ongoing talk about accelerated protectionism against Chinese products. But with more stimulus measures awaited after the ‘Two Sessions’ meetings, rumors of steel production cuts have started to be heard lately and demand is going to be stronger in spring, and so Chinese longs prices may gradually strengthen.

The average rebar price has decreased by RMB 17/mt ($2.4/mt) compared to February 24, while the average 6.5 mm HPB 300 wire rod price has also seen a decrease, of RMB 13/mt ($1.8/mt). Rebar prices have declined by RMB 3/mt ($0.4/mt) compared to the previous trading day, February 28.

During the given week, rebar and wire rod prices in the Chinese domestic market have moved down amid declining rebar futures prices. The production of rebar and wire rod has increased, exerting pressure on prices from the supply side. Demand from downstream users has improved gradually and is anticipated to improve further in the coming period, likely bolstering rebar and wire rod prices.

However, US President Trump has indicated that the threatened 25 percent import tariffs on Mexico and Canada will go into effect on March 4 as scheduled. Also, there is talk that Mexico may impose measures similar to the US tariffs on China, i.e., 10 percent tariffs on Chinese imports. This has continued to put pressure on sentiments and has prevented the Chinese market from recording any positive moves for now.

Nevertheless, an optimistic outlook has prevailed among market players amid China’s important government meetings this week. Also, a number of mills have started to implement maintenance works in Tangshan this week. It is thought that rebar and wire rod prices in the Chinese domestic market will likely increase in the coming week.

As of March 3, rebar futures at Shanghai Futures Exchange are standing at RMB 3,296/mt ($460/mt), decreasing by RMB 44/mt ($6.1/mt) or 1.3 percent since February 24, while down 0.66 percent compared to the previous trading day, February 28.  

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 7.1745