Average offer prices for ex-China wire rod have edged down slightly over the past week, and, even though official offers from ASEAN mills have been relatively stable, in deals there has also been a small decline. But market sources are sure that the downtrend will come to an end from now on amid the stronger local market in China and high iron ore prices.
Offers for ex-China wire rod from secondary steel mills have been heard at $550-570/mt FOB, edging down by $5/mt on average amid sluggish demand.
Wire rod prices in the Chinese domestic market have indicated certain rises, though demand from downstream users has remained sluggish. Sellers have attempted to raise offer prices ahead of the Chinese New Year holiday, while they also realized that buyers would refuse to accept the price rises. Import iron ore prices have seen sharp rises lately, providing solid support for wire rod prices from the cost side. On January 24, the People’s Bank of China officially announced that the reserve requirement ratio (RRR) will be cut by 0.5 percentage points on February 5, which will release RMB 1 trillion ($139 billion) in long-term liquidity to the market and bolster market sentiments. It is expected that wire rod in the Chinese domestic market will move sideways in the coming week.
Ex-ASEAN wore rod prices have settled at $550-555/mt FOB, versus $555/mt FOB last week. Though some mills have held offers at $565-570/m FOB, a deal to a distant market from Indonesia has been done at $550/mt FOB. Offer prices of ex-Malaysia wire rod have been heard at $550-560/mt FOB.
At the same time, in Southeast Asia’s import wire rod market, buyers have still been willing to conclude deals at near $550/mt CFR Manila, in line with the last deals at $547-553/mt CFR over the past two weeks. “But sellers will reflect this level now and Q195 and Q235 rods will be booked at $560-565/mt CFR at the lowest after the holidays,” a Manila-based trader said.
As of Thursday, January 25, rebar futures at the Shanghai Futures Exchange are standing at RMB 3,967/mt ($559/mt), increasing by RMB 54/mt ($7.6/mt) or up 1.4 percent since January 18, while rising by 0.69 percent compared to the previous trading day (January 24).
$1 = RMB 7.1044