China: Near-term weekly outlook on steel products

• Weak summer demand keeps steel prices range-bound
• Lower output supports prices, but inventory pressure remains

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 fluctuate around current levels over 20-24 July. Although downstream demand remains sluggish amid the ongoing summer lull for construction steel consumption, supply pressure eases further with steel mills’ increased maintenance stoppages, which is also reflected in lower inventories at both mills and traders. As such, most traders are likely to firm their offer prices against the lukewarm market sentiment.

The combined inventories of rebar and wire rod piled in the commercial warehouses in 35 Chinese cities Mysteel tracks registered 5.68 million tonnes (mnt) as of 16 July, edging down by 1.3% or 73,900 tonnes (t) on week.

Hot-rolled coil: Chinese HRC prices are expected to be slightly volatile this week. Market fundamentals for the flat steel product are likely to be solid as both supply and demand will remain weak in the near term, while high coking coal and coke prices may continue to provide some support from the cost side.

Cold-rolled coil: CRC prices are likely to fluctuate within a narrow band over the week ending 24 July. Market caution is predicted to stay strong this week due to sluggish downstream demand, as most end-users only make purchases on a need-to basis. As such, most traders prefer to hold steady offering prices and wait for further market signals.

Medium plate: Medium plate prices are expected to post small declines over 20-24 July, mainly pressured by subdued end-user demand in the ongoing summer lull. Most traders are likely to adopt a cautious stance and focus on offloading their in-hand inventories to secure their cashflow, and some of them may lower their prices to facilitate sales.

Sections: Steel section prices are likely to fall slightly over 20-24 July amid weakening market fundamentals. Limited cashflow and scorching summer heatwaves significantly slow the progress of many construction projects, leading to weak downstream demand. This, combined with elevated supply, has intensified inventory pressure for both steelmakers and traders, potentially weighing on prices of steel sections in the near term.

Note: This article is published as part of a content exchange agreement between Mysteel Global and BigMint.