- Post-holiday demand recovery remains gradual
- Inventory buildup limits near-term price upside
Mysteel Global: Below is the brief near-term outlook for five key steel products Mysteel shares on a weekly basis, drawing upon the results of related surveys and communication with Chinese market participants.
Rebar & wire rod: Prices of the two major long steel items are forecast to be slightly volatile over February 24-27. Long steel prices held largely steady over the nine-day Chinese New Year (CNY) break with most traders and end-users leaving work to enjoy the holiday.
Some steelmakers had locked in relatively high prices for end-users to replenish winter stocks ahead of the break. This, coupled with firm prices of steelmaking raw materials, could provide some support to long steel prices this week. While inventories of construction steel items accumulated amid the quietened market, the pace was slower compared to the CNY holiday of previous years.
Combined inventories of rebar and wire rod held by traders in their commercial warehouses in the 35 Chinese cities under Mysteel’s coverage climbed by 16.7% or 812,800 tonnes over the CNY festival to hit 5.69 million tonnes as of February 23.
Hot-rolled coil: HRC prices are expected to be rangebound this week. Most traders are inclined to hold a wait-and-see stance towards the near-term market and adjust their offer prices depending on the recovering pace of downstream demand after the holiday.
Meanwhile, higher inventory levels may also weigh on HRC prices to some extent. HRC inventories held by traders among 33 Chinese cities under Mysteel’s tracking moved higher by 17% or 495,500 tonnes on week to reach 3.4 million tonnes as of February 23.
Cold-rolled coil: CRC prices are projected to fluctuate in a narrow band in the week ending February 27 considering the slow recovery of downstream demand and stable CRC output. Most end-users plan to restart their operations around Chinese Lantern Festival on March 3, so traders mainly adopt a cautious stance toward the post-holiday market.
CRC output among the 29 steel mills under Mysteel’s tracking nationwide inched down by 1.3% or 11,100 tonnes on week to 875,700 tonnes over February 12-18.
Medium plate: Prices of medium plates are likely to be rangebound throughout February 27. As most end-users took early leave before the CNY holiday, demand for medium plates is forecast to witness a recovery after the break. Medium plate prices remained largely stable during the holiday.
Sections: Prices of sections are likely to increase over February 24-27, though the price gains may be limited. Demand for steel sections may inch up as end-users will gradually resume operations this week. Meanwhile, steel mills’ output of sections is expected to remain at a relatively low level.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint
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