Local Chinese longs prices rise further, futures decline signals uncertainty

As of September 2, average Chinese domestic rebar and wire rod prices have indicated further rises over the past week amid some improvement in demand and reduced supply. However, for now the fundamentals are still not good which, together with the weak PMI data, has resulted in a drop in futures prices on September 2.

The average rebar price has risen by RMB 57/mt ($8.0/mt) compared to August 26, while the average 6.5 mm HPB 300 wire rod price has seen an increase of RMB 47/mt ($6.6/mt). Rebar prices have edged down by RMB 10/mt ($1.4/mt) compared to the previous trading day, August 30.

During the given week, rebar and wire rod pries have indicated rises amid better demand from downstream users and improved transaction activities. Rebar and wire rod producers have cut their outputs further, bolstering prices. As the traditional peak season in September and October is approaching, market sentiments have improved to a certain degree.

However, rebar futures prices have indicated decreases over the past two trading days, weakening the support for the rebar and wire rod market. Moreover, in August, the purchasing managers index (PMI) for the Chinese steel sector was at 40.4 percent, 2.1 percentage points lower than that recorded in July this year, with this news worsening the market moods.

As of September 2, rebar futures at Shanghai Futures Exchange are standing at RMB 3,178/mt ($448/mt), decreasing by RMB 86/mt ($12/mt) or 2.6 percent since August 26, while down 2.0 percent compared to the previous trading day, August 30.

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 7.1027