Average offer prices for ex-China wire rod have seen decreases over the past week due to demand concerns for June and July, falling futures and slow demand. This has resulted in a drop in CFR offers to Southeast Asian buyers. Moreover, non-VAT offers have re-emerged in the market and deals for Chinese wire rod in short positions have accelerated.
Offers for ex-China wire rod from second-tier mills have been heard at $520-530/mt FOB, moving down by $10/mt on average compared to last week. The workable prices have been heard at $510-520/mt FOB, with the lower end of the range corresponding to the non-VAT offers seen over the past few days. “Demand for wire rod in most regions of China has remained slack due to the rainy season and the high temperatures, while cautious sentiments have prevailed among market players. Also, the declines in coke and iron ore prices have weakened the support for wire rod prices from the cost side,” an international trader said. In addition, decreasing rebar futures prices have also negatively affected the wire rod market and it is thought that wire rod prices in the Chinese domestic market will likely edge down further in the coming week.
Wire rod offer prices from Indonesia’s Dexin have been at $520/mt FOB, moving sideways compared to last week, but a few market sources said that the achievable level should be at $515/mt FOB against a firm bid. Offer prices of ex-Malaysia wire rod have also been heard at $520/mt FOB, moving down by $5/mt on average over the past week, while ex-Vietnam Hoa Phat wire rod has been available at $520-530/mt FOB.
In Southeast Asia’s import wire rod market, prices have dropped by up to $20/mt over the past week. The sharper fall in CFR prices compared to FOB prices in Asia is due to more non-VAT offers again and deals for short positions. In particular, at least two deals for ex-China wire rod have been done at $522/mt CFR to the Philippines, while last week the tradable level was assessed at not below $540/mt CFR due to the limited cheap options available. Also, most offers for Chinese material to the Philippines and Thailand have been at $530-535/mt CFR, versus $550/mt CFR a week ago.
As of June 13, rebar futures at Shanghai Futures Exchange are standing at RMB 3,621/mt ($509/mt), decreasing by RMB 44/mt ($6.2/mt) or 1.2 percent since June 6, while up 0.47 percent compared to the previous trading day, June 12.
$1 = RMB 7.1122