China: Near-term outlook on key steel products

• Longs prices to gain as construction activity recovers
• HRC to remain range-bound amid firm export offers

Mysteel: 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 these two major long steel items are likely to strengthen during the week of 25-29 August. Downstream demand may improve as construction work progress recovers with project funding gradually in place. On the other hand, as steel production profits have slipped recently, steel mills may adjust their rolling plans, which could lead to a further drop in supply.

Rebar production among the 137 Chinese steel producers under Mysteel’s weekly survey dropped for the second consecutive week over 14-20 August, down by a larger 2.6% or 58,000 tonnes (t) w-o-w to 2.15 million tonnes (mnt), the latest survey showed.

Hot-rolled coil: HRC prices are projected to remain range-bound during the week to 29 August. Firm exports will continue supporting prices, while rising inventories may limit the upward momentum. Possible retreats in hot metal output may also influence prices.

Cold-rolled coil: CRC prices are estimated to drop slightly in the week through 29 August. Production of this flat steel is expected to remain largely steady, while subdued downstream demand could drive CRC inventories higher.

“Traders have cut their CRC offers only slightly to facilitate sales as inventory pressure remains mild, while end-users continue to procure cautiously on a need-to basis,” noted a Shanghai-based analyst.

Medium plate: Prices of medium plates are projected to be narrowly volatile during the week to 29 August. Seasonal demand remains lacklustre, keeping procurement volume low. Meanwhile, medium plate inventories held by traders have shown signs of accumulation, prompting active selling and cautious restocking.

Sections: Section prices may tick up modestly this week, supported by steady prices of billets and relatively positive market sentiment. Output of steel sections may decrease, as more mills in North China will suspend or reduce production due to environmental reasons and blast furnace maintenance.

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