Local Chinese longs market cautious ahead of holiday, price movement limited

As of April 29, average Chinese domestic rebar and wire rod prices have fluctuated within a limited range amid the slight changes in rebar futures prices. Market participants have been mainly cautious as the restocking before the holiday is almost finished and the industrial data published lately has been far from promising.

The average rebar price has decreased by RMB 7/mt ($1/mt) compared to April 22, while the average 6.5 mm HPB 300 wire rod price has seen a drop of RMB 13/mt ($1.8/mt). Rebar prices have edged down by RMB 10/mt compared to the previous trading day, April 26.

During the given week, more inventories of rebar and wire rod have been consumed, while the growth in demand has not been as good as market players had expected, exerting a negative impact on prices. At the same time, downstream users have been unwilling to replenish stocks at high levels ahead of the Labor Day holiday (May 1-5). Steelmakers’ capacity utilization rates have been at high levels, resulting in prevailing cautious sentiments among market players. In the first quarter of this year, the ferrous metal smelting and rolling sector recorded a gross loss of RMB 21.36 billion ($3.0 billion), increasing compared to the gross loss of RMB 4.84 billion recorded in the same period of last year, as announced by China's National Bureau of Statistics (NBS). The losses of the industry have been bigger than expected, though in the April-May period profitability will improve, most market sources believe, with iron ore prices at lower levels and better demand in general. It is expected that rebar and wire rod prices in the Chinese domestic market will likely continue to fluctuate within a limited range in the coming week and the trend will depend on the demand dynamics after the holiday.

As of April 29, rebar futures at Shanghai Futures Exchange are standing at RMB 3,675/mt ($517/mt), increasing by RMB 5/mt ($0.7/mt) or 0.03 percent since April 22, while up 0.14 percent compared to the previous trading day, April 26.

Average domestic rebar and wire rod prices in China's main markets are presented in the tables below.

Rebar prices in local markets

All prices include 13 percent VAT and all prices are ex-warehouse.

Wire rod prices in local markets

All prices include 13 percent VAT and all prices are ex-warehouse.

$1 = RMB 7.1066