China's domestic longs market retained its upward movement in the first half of the past week before declining during the remaining days of the week. Although Chinese mills continued to raise their ex-factory prices, their upward adjustments did not succeed in providing adequate support for market prices. As a result, following a total increase of RMB 1,300/mt over the past four months, China's long products market has begun to enter a phase of downward movement, while a considerable rise has been seen in market inventory levels.
Product name | Specification | Category | Average price (RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
Rebar | 20 mm | HRB 335 | 4,650 | 681 | +270 |
Rebar | 20 mm | HRB 400 | 4,780 | 700 | +290 |
Wire rod | 6.5 mm | Q235 | 4,540 | 665 | +240 |
During the end of the previous week, Jiangsu Province-based Shagang sharply hiked its construction steel prices for early August, with its rebar prices rising by RMB 600/mt and its wire rod prices up by RMB 500/mt, thus driving up the local market significantly over the first half of the past week. However, in the second half of the week, in a context of weakening support from market demand, some traders who were eager to cash in their profits sold their materials at low prices. Moreover, at the same time the futures market registered a correction, causing increased uncertainty in the market and leading to an obvious decrease in market prices at the end of the week.
Boosted by Shagang's increased prices, the eastern China market surged strongly at the beginning of the week, but then declined during the remaining days of the week due to lack of support from trading activities. The Shanghai and Hangzhou markets were the first leading markets to indicate a decline in the past week. Last week, rebar inventory in Shanghai totaled 338,000 mt, up 24,000 mt week on week; meanwhile, wire rod inventory in Shanghai reached 71,000 mt, up 2,000 mt compared with the previous week.
As regards the northern regions, the Beijing and Tianjin markets also initially posted a rise before sliding back down. Last week, construction steel inventory in Beijing began to rise, with rebar inventory climbing by 21,900 mt week on week to 210,300 mt and wire rod inventory up by 100 mt to 53,200 mt.
On the raw material side, the domestic pig iron market registered an overall ascension during the past week, though a certain degree of confusion was observed in market quotations; meanwhile, the scrap market continued its soaring movement until Friday when a slide was recorded in market prices. Remaining on a positive trend, the Chinese billet market moved up by RMB 150-270/mt compared with the previous week.
Overall, lacking support from market demand, many traders are now eager to cash in their profits, and so the current market is full of low-price materials. In this context, the Chinese long products market is expected to post a downward movement in the coming week.