China: Near-term weekly outlook on key steel products

Rebar & wire rod: Prices of the two major long steel items are expected to stay at a relatively high level over May 18-22, primarily underpinned by firm cost support and healthy market fundamentals. Long steel inventories have been continually experiencing a seasonal drawdown, and the downtrend is expected to persist this week with both supply and demand rising.

Combined inventories of rebar and wire rod stockpiled in commercial warehouses in the 35 Chinese cities under Mysteel’s tracking thinned further for the ninth week, with the tonnage falling by 6.1% or 381,700 tonnes (t) on week to sit at 5.84 million tonnes (mnt) as of  14 May. The pace accelerated from the prior week’s 1.5% w-o-w decline.

Hot-rolled coil: HRC prices may post mild dips this week, mainly due to the fragile recovery of downstream demand. High spot prices this week have intensified market cautions, prompting end-users only to purchase HRC to meet near-term needs. But steelmakers have proactively controlled their production pace, which may sustain the destocking trend and provide some support for prices of the flat steel item.

Cold-rolled coil: CRC prices are likely to be rangebound in the week ending 22 May as CRC supply still hovers relatively high and demand shows little improvement. Market focus has switched back to demand-driven trading as speculative activity has waned with cooling ferrous futures. As such, most CRC traders hold a cautious outlook for the near-term market and attempt to offload their stocks amid ample supply.

Medium plate: Prices of medium plates are forecast to be slightly volatile throughout 22 May. Downstream consumption of medium plates last week witnessed a small on-week decline amid strengthening market cautions. Most traders now focus more on liquidating in-hand inventories.

Sections: Prices of steel sections are likely to weaken slightly over 18-22 Mayamid rising supply pressure. Steelmakers generally maintain high operation rates at their furnaces and rerollers show clear interest in ramping up production amid healthy profit margins, pointing to growing pressure on the supply side. In addition, with operations of some construction projects slowing down due to tight cashflow, their demand for replenishment has also reduced, which could weigh on prices of steel sections.

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