Near-term outlook on China’s steel products

• Longs may dip on weak demand due to monsoon
• HRC prices to climb up amid thinning inventories

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 long steel products will likely soften over 19-23 May, as some mills may ramp up production on improved profit margins, while demand may be constrained by the imminent rainy season in southern parts of China.

Hot-rolled coil: Prices are expected to move up amid fluctuations in the week through 23 May, as hot-rolled coil (HRC) inventories held by traders have thinned again following slow arrivals from steel mills. However, sources caution that many end-users are still adopting a wait-and-watch approach.

HRC stocks at traders’ warehouses in the 33 Chinese cities that Mysteel tracks declined by 3.9% or 109,700 tonnes (t) w-o-w to 2.69 million tonnes (mnt) as of 15 May.

Cold-rolled coil: Prices are estimated to move downward in the week ending 23 May, as production may persist high, while end-users mainly procure CRCs just for immediate demand. Moreover, market support from the macroeconomic side may gradually ease.

Medium plate: Prices may be slightly range-bound during 19-23 May. Currently, most traders are cautiously optimistic about the market outlook while keeping low stocks in hand. Meanwhile, end-users are also unwilling to build up their medium plate stocks.

Stocks of medium plates at commercial warehouses in the 31 cities Mysteel monitors nationwide dipped by 0.8% or 7,500 t w-o-w to 968,900 t by 15 May. This volume was 36.8% lower y-o-y.

Sections: Prices of steel sections are expected to experience narrow volatility this week. On the one hand, output may rise, as integrated mills may increase production, driven by higher margins on selling sections. On the other hand, demand from building contractors continues to pick up slowly due to their tight cash flow. Meanwhile, resilient raw material prices may lend some support to tags of sections.

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