Local Chinese longs prices soften further but only slightly, outlook still bearish

As of July 1, average Chinese domestic rebar and wire rod prices have seen decreases amid the hot weather and heavy rainfalls in China, but the declines have been smaller compared to previous weeks because of the limited to zero margins and the slight rebound in iron ore prices since the middle of last week. Nevertheless, the outlook in the rebar market has remained negative for the coming week.

The average rebar price has decreased by RMB 10/mt ($1.4/mt) compared to June 24, while the average 6.5 mm HPB 300 wire rod price has seen a drop of RMB 3/mt ($0.4/mt). Rebar prices have edged down by RMB 7/mt compared to the previous trading day, June 28. Last week, Chinese longs prices moved down by $8-10/mt.

During the given week, rebar and wire rod prices in the Chinese domestic market have edged down amid high steel outputs. Meanwhile, the hot and rainy weather conditions have continued to exert a negative impact on the demand for rebar and wire rod. Inventories of rebar and wire rod have increased too, weakening the support for prices. The only reason for Chinese longs prices not to go down sharply is the cost of raw materials. The demand for longs will remain slack, while bearish sentiments prevail among market players, which will drag down rebar and wire rod prices in the coming week.

As of July 1, rebar futures at Shanghai Futures Exchange are standing at RMB 3,562/mt ($496/mt), increasing by RMB 30/mt ($4.2/mt) or 0.85 percent since June 24, while up 0.71 percent compared to the previous trading day, June 28.

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 7.1265