- Weak demand, rising inventories to pressure steel prices
- Medium plate may hold firm on shipbuilding, wind power demand
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 downtrend over 3-7 August amid weakening cost-side support and downbeat market sentiment. Steelmakers in key areas pushed through the second round of coke price cuts last week to alleviate their deep losses from steel sales while mulling further price reductions on this feed material in the coming weeks.
Steel mills are likely to keep reining in their production of long steel items this week, but the near-term market sentiment stays bearish as subdued downstream demand keeps pushing up long steel inventories held by traders.
Combined inventories of rebar and wire rod held in commercial warehouses in 35 Chinese cities under Mysteel’s tracking came in at 5.84 million tonnes (mnt) as of 30 July, up by 1.2% or 70,800 tonnes (t) on week.
Hot-rolled coil: Chinese HRC prices are projected to remain weak this week, pressured by bleak market mood and high inventory levels. Subdued downstream demand also serves as an important factor weighing on the prices of flat steel. Against this backdrop, most HRC traders have become more pessimistic about near-term sales and are expected to reduce offering prices to clear stocks in hand.
Cold-rolled coil: CRC prices are likely to witness mild declines over the week ending 7 August, given the persistent imbalance between supply and demand in a typical seasonal lull. Downstream demand for this flat steel remains sluggish, and most end-users only replenish stocks on a need-to basis amid ample market supply, pointing to cautious buying in the near term.
Medium plate: Medium plate prices are expected to be largely stable over 3-7 August. Disrupted outdoor construction projects amid scorching heatwaves and weakening cost support would be the primary factors weighing on prices of medium plates. But the flat steel product boasts better resistance to price declines in the summer lull thanks to the steady demand from medium- and long-term orders in sectors like shipbuilding, wind power and pressure vessel production.
Sections: Steel section prices are likely to fluctuate within a narrow band over 3-7 August. Most market participants remain pessimistic about the near-term market despite easing supply pressure last week, as construction activity in downstream sectors slowed amid hot weather and tight cash flow conditions. This trend may keep capping end-users’ interest in restocking and pose downside pressure on section prices.
Note: This article is published as part of a content exchange agreement between Mysteel Global and BigMint.
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