Near-term outlook on China’s steel products

• Long steel prices may strengthen amid supply shortages
• HRC demand weak amid stable post-holiday supply

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 expected to strengthen over May 6-9, mainly driven by expectations for demand recovery after market players return from the May Day holiday and notable shortages of certain specifications in the northern market. In addition, the low supply of construction steel items – especially rebar – and firm cost support will collectively buoy long steel prices in the short term.

Hot-rolled coil: HRC prices are projected to remain largely stable this week. Chinese steelmakers generally maintained normal supplies over the May Day holiday, while retail stocks accumulated at a mild speed over the period amid subdued demand. With few factors to boost demand after the holiday, most end-users may stay cautious, and downstream consumption will probably remain weak.

Cold-rolled coil: CRC prices are likely to post mild gains in the week ending May 9. Steady production and sluggish demand over the holiday are expected to lead to moderate inventory pressure, but some traders are positive about the post-holiday market, citing rising production costs amid higher HRC prices.

Medium plate: Prices of medium plates are forecast to rise mildly throughout May 9. Although mills’ recovering output of medium plates may lead to slight inventory build-up over the holiday, the impact on post-holiday prices is expected to be limited, as downstream demand is likely to pick up after the break.

Sections: Prices of steel sections are likely to post small gains over May 6-9. End-users are expected to replenish stocks after the May Day holiday, resulting in a release in downstream demand and a warm market sentiment. In addition, firm raw material prices will continue to provide some support to section prices from the cost side.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.