- HRC to remain stable as futures strength offsets inventory pressure
- Weak demand, tight liquidity to keep long steel prices under pressure
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 fluctuate within a narrow range over 15-18 June. Sluggish demand for construction steel amid frequent downpours, high temperatures, and tight project cashflow will continue weighing on long steel prices. This, together with a rebound in output, may also end the 13-week decline in retail construction steel inventories this week. However, the new coke price hikes proposed by producers last Friday, set to take effect this Monday, will provide firm support on the cost side.
The combined stocks of rebar and wire rod held by traders in commercial warehouses in 35 Chinese cities under Mysteel’s tracking totalled 5.41 million tonnes (mnt) as of 11 June, edging down by only 0.5% or 27,100 tonnes on week.
Hot-rolled coil: HRC prices may stabilise this week. Although subdued seasonal demand for the flat steel product is expected to pressure HRC prices and contribute to continued inventory buildup, along with rising HRC production, downside room for the flat steel prices may remain limited given their currently low levels and the recent strengthening in futures prices.
HRC inventories held by traders in commercial warehouses in the 33 Chinese cities under Mysteel’s tracking reached 3.49 million tonnes as of 11 June, mounting for the fourth consecutive week by 1.8% or 60,300 tonnes on week.
Cold-rolled coil: CRC prices are likely to post small declines over the week ending 18 June. Spot transactions for CRC remained lukewarm last week, though some traders secretly lowered their offers to secure deals. This has slightly increased traders’ pressure on inventory destocking and may allow more room for price negotiations in the spot market this week.
Medium plate: Medium plate prices are expected to be slightly volatile throughout 18 June. Following cautious market sentiment stemming from a slight decline in apparent consumption of medium plates last week, sellers are forecast to continue focusing on reducing their stocks on hand.
Sections: Prices of steel sections are likely to extend mild drops over 15-18 June. Weighed down by sluggish downstream demand due to frequent rainfall and insufficient funding, inventory pressure is expected to remain elevated despite proactive production cuts by steelmakers. In addition, lower billet prices could weaken the support from the cost side and weigh on the prices of steel sections as well.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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