BEIJING (Scrap Monster): With prices of wire rod and rebar running in a downward trend again, most traders are pessimistic about the coming construction steel market in China.
The current demand is weak and it is likely to be weaker in following several weeks when there are more hot and rainy days. Observers predict prices are likely to go down further.
The sales manager of Jinkaili Trading in Shanghai revealed that his offers for rebar HRB335 Φ16mm-22mm from Wuhu Xinxing Pipes and high speed wire rod Q235 Φ6.5mm-10mm from Jiujiang Steel are RMB3,960/t (Theoretical weight and VAT included) and RMB4,010/t (Net weight and VAT included), down by RMB10/t compared with those of last transaction day.
The source said the stock market performed terribly on Monday, which imposed negative influence on the futures market of rebar and wire rod, with the markdown at over RMB60/t. Therefore, the spot market was rather dull and few customers placed orders. His sales volume on Monday was less than 400t while the target level is more than 600t. Therefore, he reduces the quotation slightly as most traders do.
However, the downward price trend is likely to go on, so the source is worried about the coming market.
The sales manager of Mingtai Trading in Guangzhou, Guangdong Province, reported that prices of rebar HRB335 Φ18mm-25mm and high speed wire rod Q235 Φ6.5mm-10mm from Shaoguan Steel are RMB4,040/t and RMB4,140/t (Net weight and VAT included) respectively, unchanged compared with those of last trading day, but prices decreased by RMB10/t this Monday.
The source said because most buyers are watching the market and waiting for a price decline again, the demand is soft. He only sold about 200t of materials on Tuesday, one third of the target level, so he deems the price is likely to go down further in following several days, but the markdown will be narrow as traders are unwilling to loss more money. His current stock is around 5,000t while the regular level was more than 10,000t in past years.
The sales manager of Kechen Trading in Chengdu, Sichuan Province, revealed that quotations for rebar HRB335 Φ18mm-25mm and high speed wire rod Q235 Φ6.5mm-10mm from Chuanwei Steel are RMB4,080/t and RMB4,130/t (Net weight and VAT included) respectively, stable compared with those on the previous day.
The source said prices went up last week, but it did not encourage buyers to place orders. Besides, the international economic situation is deteriorating and it is not helpful for the development of domestic economy and the steel market.
Therefore, both traders and customers in Chengdu are not confident of the coming market and the source deems the construction steel price will go down again in following two days. His current sales volume is only 100-200tpd while the regular level in the high season is 300-400tpd.
The sales manager of Hengyuan Trading in Beijing told that his quotations for rebar HRB335 Φ18mm-25mm and high speed wire rod Q235 Φ6.5mm-10mm from HBIS Steel are RMB4,130/t and RMB4,060/t (Net weight and VAT included) respectively, down by RMB20/t compared with those of last transaction day.
According to the source, because the market demand shrinks much after the price moved up last week, traders in Beijing have to reduce offers again.
The total inventory of wire rod and rebar in Beijing moved up by 3,000t in past several days, and it is in an increasing trend. Therefore, under the pressure of weak demand and high inventory, traders all deem that prices are likely to drop again in coming two days
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