Prices rise, inventory decreases in China’s longs market

Given the strong rise observed in the steel futures market, China's domestic long product prices began to rebound in the past week. Meanwhile, end-side buyers accelerated their purchasing activities, leading to an obvious increase in the overall trading volume, with market inventory registering a remarkable decrease at the same time.

Following the price ascension in eastern China, a certain release was observed in market demand during the past week, contributing to the relatively active trading performance on the whole. Coming up to the end of the week, the long products market gradually became stable, while a weakening was seen in levels of commercial activity as many players adopted a wait-and-see stance. As regards inventory levels, rebar inventory in the Shanghai market totaled 277,600 mt, down 16,570 mt week on week, while wire rod inventory amounted to 98,870 mt, a decline of 7,040 mt compared with the previous week.

Over the past week the Beijing and Tianjin markets surged sharply before registering a decline, which was in turn followed by a minor upturn. After hitting a short-term bottom of RMB 3,350/mt in the previous week, market prices of HRB 335 rebar posted a remarkable rebound in the following week despite the still lofty market inventory levels, with the increase range amounting to RMB 90-180/mt at the beginning of the past week. However, market prices registered a decline of more than RMB 50/mt towards the end of the week. In the past week, rebar inventory in the Beijing market totaled 258,900 mt, down 16,440 mt week on week, while wire rod inventory stood at 83,200 mt, a slip of 3,180 mt week on week.

On the raw material side, prices of both special and common alloys remained soft during the past week, while the scrap market maintained a weak stability on the whole, with slight fluctuations recorded in some regions. With mainstream prices still on a stable trend, the domestic billet market saw downward adjustments of RMB 30-50/mt in some regions.

Summing up, although market inventory has been moving downward over the past two weeks, overall inventory still remains at a relatively high level. Looking at the current situation, since the northern market seems sluggish at the moment, the flow of northern materials to the south is likely to increase in the future, thus increasing the supply pressure on the southern market. Meanwhile, some traders are standing aside from the market for the time being. In the coming week the long product market in China is expected to follow a fluctuating trend.