Over the past week the Chinese long products market first climbed up before then starting to slide back down; however, coming up to the end of the week, the market had accumulated enough momentum for a new round of price increases.
Product name | Specification | Category | Average price(RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
Rebar | 20 mm | HRB 335 | 3,350 | 491 | -30 |
Rebar | 20 mm | HRB 400 | 3,500 | 513 | -30 |
Wire rod | 6.5 mm | Q235 | 3,290 | 482 | -50 |
In the past week, China's domestic long products market showed a mild correction after its previous continuous increase, indicating that although the market has entered an overall rising phase the upward process will not be smooth.
Looking at the situation in the various regions, the northern market, which had registered the biggest increase in the previous week, dropped down by a margin of RMB 70/mt ($10/mt), while the market in the south maintained an overall stability, with no obvious change observed in market prices. On April 24, Hebei Steel Group issued its longs prices for May, with an upward adjustment of RMB 60/mt ($9/mt) made to wire rod prices, and with rebar prices rising by RMB 80/mt ($11/mt). The latest price list of Hebei Steel Group, one of the most influential mills in China, has played an important role in stabilizing the market. As a result, the various regional markets finally became stable at the end of the week, with a minor rebound even seen in some individual markets.
With market players more inclined to buy in materials when prices are on an upward trend, the nationwide trading volume expanded considerably during the previous week when market prices were moving up; however, when prices descended in the past week the trading volume shrunk somewhat. In general, local market players have become very cautious following the price slump in the latter part of 2008.
Last week, total long product inventory in the Chinese market dropped down, with a particularly remarkable decrease seen in wire rod inventory. However, unlike the previous decline recorded in almost all regional markets, this time some individual markets have registered certain increases in market inventories. For instance, inventory in Guangzhou has jumped up by a relatively big margin, and is expected to exert an impact on the southern market in the coming period.
As regards raw materials, iron ore prices have been showing stable movement in the domestic market in recent days, with a certain climb seen in quotations of Indian ore to China, thus providing support for the domestic longs market to a certain extent.
Overall, the Chinese long products market has entered a rising phase and is expected to continue on an upward trend during the coming two months. Nevertheless, it should also be pointed that this upward movement is likely to be slow and tortuous.