China: Near-term outlook on steel products

• HRC prices may stay flat amid reduced output despite weak sales
• Longs to rise as weather turns favourable for construction activity

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 rise mildly over 7-10 April. End-user demand is likely to see a positive recovery amid fine weather conditions for outdoor construction works this week. In addition, prices of key steelmaking raw materials would stay high as the Middle East tensions persist, continuing to provide support to long steel prices from the cost side.

Hot-rolled coil: HRC prices are projected to be range-bound this week. Spot trading volume for the flat steel product remained lukewarm last week, with most end-users making purchases only on a need-to basis. On the supply side, some mills may scale back HRC output recently, which has fuelled optimism among traders, with some inclined to hold sales of their HRC inventories.

Cold-rolled coil: CRC prices are likely to be slightly volatile in the week ending 10 April. Although retail inventories of this flat steel are declining, the overall trading sentiment remains tepid, driven by slower procurement from end-users. As such, most traders maintain a cautious view of the near-term market, citing weak demand-side recovery and loosening cost support which together hinder sustained price increases.

CRC inventories held by traders among 29 Chinese cities under Mysteel’s tracking edged down by 0.9% or 23,000 t w-o-w to 2.51 mnt as of 2 April.

Medium plate: Prices of medium plates are forecast to post small gains throughout 10 April amid recovering market fundamentals. Lower inventories prompted most traders to adopt a positive stance in the short term in spite of an anticipated rebound in output as some medium plate plants will resume production this week.

Stocks of medium plates held in commercial warehouses in 65 Chinese cities under Mysteel’s coverage thinned by 2.6% or 78,100 t w-o-w to 2.9 mnt as of 2 April.

Sections: Prices of steel sections are likely to strengthen slightly over 7-10 April. Fundamentals for steel sections market are projected to recover amid higher downstream demand. Furthermore, firm cost support will lead steelmakers to hold firm offer prices for sections, further tightening the availability of low-priced cargoes in the spot market.