Local Chinese longs prices up $16/mt in two weeks, but negative start to new week

Chinese domestic rebar and wire rod prices have indicated increases over the past two weeks ending today, September 23 amid slight increases in rebar futures prices and better trading activity before the Mid-Autumn Festival early last week. However, the market has opened negatively today as weak demand prospects persist and there is insufficient support from the government for the struggling real estate sector. Also, iron ore prices have fallen below the $90/mt CFR mark again.

The average rebar price has increased by RMB 110/mt ($16/mt) compared to September 9, while the average 6.5 mm HPB 300 wire rod price has seen a rise of RMB 93/mt ($13.2/mt) over the same period. Rebar prices have decreased by RMB 37/mt ($5.3/mt) compared to the previous trading day, September 20.

During the past two weeks, rebar and wire rod prices have moved on an uptrend amid the consumption of inventories. Currently, the inventory of rebar and wire rod on the stockists’ side is at relatively low levels, bolstering prices. However, steelmakers’ capacity utilization rates have increased, which will likely exert a negative impact on prices. Downstream users will build up some stocks ahead of the National Day holiday (October 1-7), which will positively affect market sentiments. At the same time, Jiangsu Province-based Shagang Group has raised its offer prices for debar-in-coil and rebar by RMB 100/mt ($14/mt) for September 21-30.

Despite some cautious optimism prevailing earlier this month, negative sentiments have persisted. “The US Federal Reserve’s action does not have a direct influence on Chinese central bank policy and only some minor change was seen in 14-day interest rates today. A negative market mood persists and physical sales are slower, with pressure to sell, and prices have been adjusted down by RMB 20-50/mt in most regions,” a Chinese trader stated.

As of September 23, rebar futures at Shanghai Futures Exchange are standing at RMB 3,087/mt ($433.5/mt), increasing by RMB 9/mt ($1.3/mt) or 0.3 percent since September 9, while down 3.35 percent compared to the previous trading day, September 20.

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 7.053