In the past week the Chinese domestic longs market generally followed a weak trend, though prices in the northern market increased. Some market prices of longs are still lower than ex-mill prices. During the May Day holiday, many steelmakers issued new price policies, while the Chinese central bank raised the reserve deposit ratio. These factors will influence the future trend of prices.
Product name |
Specification |
Category |
Average price (RMB/mt) |
Price ($/mt) |
Weekly change ($/mt) |
6.5 mm |
Q235 |
4,480 |
657 |
-13 |
|
20 mm |
HRB 335 |
4,447 |
652 |
-7 |
|
20 mm |
HRB 400 |
4,593 |
674 |
-16 |
On May 3, Q235 6.5 mm high speed wire rod prices in Shanghai, Beijing and Guangzhou markets stood at RMB 4,380/mt ($635/mt), RMB 4,480/mt ($657/mt) and RMB 4,630/mt ($679/mt) respectively; HRB 335 20 mm rebar prices were at RMB 4,170/mt ($611/mt), RMB 4,710/mt ($691/mt) and RMB 4,460/mt ($654/mt) respectively; HRB 400 20 mm rebar prices were at RMB 4,220/mt ($619/mt), RMB 4,800/mt ($704/mt) and RMB 4,760/mt ($698/mt) respectively. All prices include 17 percent VAT.
In the past week, several steelmakers issued rebar prices for May. Also, on May 2, the People's Bank of China stated that from May 10 it is increasing the required RMB reserve deposit ratio at financial institutions by 0.5 percent. It is expected that this policy will freeze about RMB 300 billion ($43.99 billion). The policy is aimed at preventing inflation and the overheating of the economy. The move is expected to impact liquidity in the steel markets.
In the international market, on May 2 the Australian government proposed a new tax on resources at a rate as high as 40 percent. In a market where iron ore is in short supply, the tax may transfer the additional cost on iron ore to exports, which may increase the costs of Chinese importers.
During China's May Day holiday (May 1-3), major steelmakers in eastern China, namely, Shagang Group, Jiangsu Yonggang Group and Zenith Steel Group issue price policies for the May 1-10 period. Shagang Group's ex-mill prices for rebar, wire rod and rebar in coils remained unchanged, Jiangsu Yonggang Group's prices for rebar, wire rod and rebar in coils all decreased by RMB 100/mt ($15/mt). Meanwhile, influenced by Hebei Iron and Steel Group's price increases, northern Chinese steel prices for the construction sector registered a massive general increase. Even steel for construction in the Tangshan district registered an increase of RMB 70-120/mt ($10-18/mt). It seems difficult to change the current situation where ex-mill steel prices are higher than market prices, and in the future costs will obviously provide support for the market.