- Longs prices may continue climbing as output hits all-time low
- Higher coke costs to lift HRC prices but weak demand to limit gains
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: China’s prices of the two major long steel items are expected to extend their uptrend over 7-11 September with improving market fundamentals and firm cost-side support.
Mysteel’s weekly tracking found that steel mills’ construction steel output dropped to an all-time low last week. Although supply may recover this week, the increase is expected to be quite modest, as rising raw material costs keep squeezing mills’ steel margins. This will extend the downtrend in long steel inventories this week.
This week, coke prices are expected to strengthen further following the fifth round of price hikes initiated by major coke firms on Monday, which will continue to lend cost support to long steel prices, Mysteel learned.
Hot-rolled coil: Chinese HRC prices are projected to climb, albeit slightly, this week. On one hand, price rises from the cost side will remain a steady support for steel prices. On the other hand, the actual downstream demand for flat steel has yet to fully recover. This has slowed down the destocking pace along with recovering HRC output at mills, and most traders are expected to prioritise clearing inventories in the near term.
HRC output among the 37 domestic steelmakers under Mysteel’s coverage totalled 2.95 million tonnes (mnt) over 27 August-2 September, up by 2.4% or 68,100 tonnes (t) on week.
Cold-rolled coil: CRC prices are likely to be range-bound over the week ending 11 September. Although the futures market gained some ground last week, subdued downstream demand and elevated retail inventory levels have kept most CRC traders in a cautious stance towards the near-term market, focusing on clearing their in-hand inventories.
Medium plate: Medium plate prices are expected to post mild gains over 7-11 September. Mills’ inventories dropped further last week, indicating a seasonal pickup in end-user demand and uplifting market sentiment. This, together with firmer cost support, is expected to bolster domestic medium plate prices.
Medium plate inventories held by 37 Chinese steel mills Mysteel regularly checks edged down by 1.1% or 7,300 t on week to 670,500 t as of 3 September, marking the lowest level this year.
Sections: Steel sections prices are likely to stay elevated over 7-11 September. Firm billet prices have lent cost-side support to section prices. While the purchasing pace from downstream buyers remains slow, supply pressure is also projected to stay mild as some steelmakers are likely to scale down production or conduct maintenance of their re-rollers.
Note: This article is published as part of a content exchange agreement between Mysteel Global and BigMint.
Leave a Reply