Ex-Asia wire rod settles at higher levels, trend reversal looms amid colder weather in China

Thursday, 14 December 2023 15:42:11 (GMT+3)   |   Shanghai
       

Ex-Asia wire rod prices have increased a little further or have settled at the higher levels voiced last week, but the mood has started to change and market sources are waiting for a trend reversal due to the slowdown in local demand in China due to seasonal reasons and the weaker-than-expected stimulus announcements after the Central Economic Work Conference early this week.

Offers for ex-China wire rod have been heard at $550-580/mt FOB, edging up by $5/mt on average due to the rise on the higher end compared to December 7.

During the given week, demand for wire rod has slackened due to the colder weather in China, especially in the north, exerting a negative impact on prices in the Chinese domestic market. At the same time, steelmakers’ production activities have not slowed down significantly, with supply exceeding demand, weakening the support for wire rod prices. However, demand for wire rod in southern China has been at decent levels, and so wire rod supplies have been directed to southern China. “Meanwhile, rebar futures prices have seen decreases, but the relatively high levels of raw material prices have provided solid support for ex-China wire rod from the cost side,” a Chinese trader said. It is thought that wire rod prices in the Chinese domestic market will likely decline due to the colder weather.

Offer prices for ex-Indonesia and ex-Malaysia wire rod have remained at $555-565/mt FOB, but no deals at higher levels have been reported so far. The highest sales prices to Europe were at $545-550/mt FOB.

In the import wire rod market in Southeast Asia, the tradable level has reached its peak at $550-555/mt CFR, increasing by $7.5/mt on average from last week. A deal for Q235 material has been done at $552/mt CFR to the Philippines, but “before futures went down on Wednesday and Thursday,” a trader said. Now, the tradable level is again below $550/mt CFR, sources believe.

As of Thursday, December 14, rebar futures at the Shanghai Futures Exchange are standing at RMB 3,925/mt ($565/mt), decreasing by RMB 86/mt ($12.1/mt) or down 2.1 percent since December 7, while declining by 1.63 percent compared to the previous trading day (December 13).

$1 = RMB 7.109


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