Average offer prices for ex-China wire rod have moved down over the past week, and ASEAN mills have also followed the trend. With the sharp drop in futures prices by 5.4 percent in China over the past week, the market mood has become more bearish and market sources are waiting for more steel production cuts in China along with those that have already been announced.
Offers for ex-China wire rod from second-tier mills have been heard at $520-540/mt FOB, moving down by $15/mt amid the prevailing bearish sentiments and the decreasing trend in local wire rod prices. Buyers from Southeast Asia even canceled some of their bookings due to the continually decreasing wire rod prices in the Chinese domestic market. Meanwhile, some wire rod producers suspended giving offer prices to the export market.
“More wire rod producers have implemented maintenance works, while some cities in China’s Hebei Province initiated a level II emergency response, resulting in declines in outputs. But it is not enough now. Import iron ore prices have moved down further, weakening the support for wire rod prices from the cost side,” an international trader said, adding that the demand from downstream users had improved more slowly than expected. At the moment, market participants are waiting for some support from production reductions in Guangdong, Fujian, Sichuan and Chongqing.
Offer prices of Indonesia’s Dexin wire rod have been heard at $535/mt FOB, down $10/mt week on week, while ex-Malaysia wire rod has been available at $540/mt FOB, also down $10/mt compared to last week. There has been no information about new deals as buyers have taken a wait-and-see position in the current falling market. The previous sales for sizable lots were done last month at prices of $545-555/mt FOB.
In Southeast Asia’s import wire rod market, the lowest offers for Chinese Q195 material have remained at $530/mt CFR Manila, while for Q235 the levels stand at $535-540/mt CFR. These levels are mainly from traders in short position, while mills are not going below $545/mt CFR. “Not much decline is seen at the moment. The fall already happened last week,” a source in the Philippines said.
As of March 14, rebar futures at Shanghai Futures Exchange are standing at RMB 3,506/mt ($494/mt), decreasing by RMB 199/mt ($28/mt) or 5.4 percent since March 7, while down 2.96 percent compared to the previous trading day, March 13.
$1 = RMB 7.0974