In the significant market decline seen since early August, long product prices in China have registered a decrease of more than RMB 800/mt. Under the combined effects of the previous strong surge of prices, the rapid production expansion and reduced new bank loans, China's domestic longs market slumped considerably in August. In addition, it is estimated that the Chinese market will remain on its sliding trend in the short term. Considering the continuing rise of inventory levels, China's longs market is likely to fluctuate at low levels in the long run.
Product name | Specification | Category | Average price (RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
Rebar | 20 mm | HRB 335 | 3,800 | 556 | -180 |
Rebar | 20 mm | HRB 400 | 3,990 | 584 | -180 |
Wire rod | 6.5 mm | Q235 | 3,660 | 539 | -160 |
Over the past week, Chinese construction steel prices retained their downward movement, with most regional markets dropping by RMB 100-200/mt. Since most medium and small buyers have continued to be cautious and to stand aside from market trading in recent days, market demand has appeared quite slack, with an overall softness observed in the market trading performance. Meanwhile, domestic mills have not reduced or suspended their production and so market inventory and mills' stocks have continued to go up, thus driving market prices down further in the past week. At the end of the week, market prices in some regions showed certain signs of stability; however, it remains to be observed whether the overall market will start to move on a stable trend.
Long product inventory in China kept climbing during the past week. According to a survey of large warehouses across China (excluding the autonomous regions of Xinjiang and Tibet), rebar inventory totaled 4.00519 million mt, up 83,470 mt week on week; meanwhile, wire rod inventory amounted to 1.27372 million mt, up 50,860 mt.
According to the latest figures released by the Chinese customs, in July the country's long product exports continued to plummet, with a sharp rise recorded in wire rod imports. Nevertheless, the import volume is still relatively small and so the domestic market has not seen any impact. In addition, during the first seven months of the current year, the country posted a net export volume for wire rod, but saw a deficit in trading value for this product.
China's rebar exports in July stood at 16,100 mt, down 104,700 mt or 86.7 percent year on year, totaling $10 million in value, down $103 million or 91.09 percent compared with the same month last year. The average export price was $626.52/mt. Total rebar exports in the January-July period reached 193,900 mt, down 576,200 mt or 74.82 percent, amounting to $120 million in value, down $448 million or 78.86 percent year on year.
Rebar imports in July stood at 1,700 mt, down 200 mt or 17.47 percent year on year, totaling $1 million in value, up $300,000 or 20.34 percent compared with the same month last year. The average import price was $659.61/mt. Total January-July rebar imports reached 17,200 mt, down 1,400 mt or 7.41 percent, amounting to a total value of $13 million, up $3 million or 28.33 percent year on year.
China's wire rod exports in July totaled 70,000 mt, down 622,300 mt or 89.89 percent year on year, totaling $38 million in value, down $601 million or 94.06 percent compared with the same period last year. The average wire rod export price was $542.36/mt. Total exports in January-July reached 444,500 mt, down 2.6558 million mt or 85.66 percent, amounting to $235 million in value, down $2.25 billion or 90.54 percent year on year.
Wire rod imports in July amounted to 56,700 mt, up 14,500 mt or 34.23 percent year on year, totaling a value of $53 million, down $5 million or 8.9 percent compared with the same period last year. The average wire rod import price was $926.95/mt. Total imports in January-July reached 250,900 mt, down 65,500 mt or 20.69 percent, amounting to $260 million in value, down $119 million or 31.28 percent year on year.
On the raw material side, China's domestic pig iron market continued to slide down during the past week against a background of bearish commercial activity; meanwhile, the scrap market continued to decline, with reductions made by some mills to their purchase prices. The Chinese billet market moved down by RMB 50-250/mt compared with the previous week.
Overall, some players think that market prices have hit bottom due to the extent of the correction already seen and that prices will show a recovery once any good news is heard in the market. However, considering the current levels of inventory and of the mills' outputs, the market lacks the support of positive factors for a recovery. In general, China's domestic long products market is expected to fluctuate in the coming week.