Near-term outlook on China’s steel products

• Longs, HRC prices may decline amid rising stocks
• Markets see weak restocking post national holiday

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 major long steel items are expected to dip over 13-17 October. Accumulating stocks of steel longs across the country and weak macroeconomic expectations will put pressure on the prices of these two steel items.

The combined stocks of rebar and wire rod held in commercial warehouses in Mysteel’s small sample of 35 Chinese cities reached 5.44 million tonnes (mnt) by 8 October, mounting by 5.1% from the pre-holiday level.

Hot-rolled coil: HRC prices are projected to decline during the week up to 17 October. Most end-users did not replenish stocks after the long national holiday as expected, and the sharp increase seen in HRC inventories has intensified market players’ cautious stance, particularly amid the tepid downstream demand.

Cold-rolled coil: CRC prices are estimated to remain under pressure through 17 October. CRC production edged up slightly, while inventories held by both mills and traders accumulated quickly due to a trading lull during the holiday. Most traders continued to hold a wait-and-watch approach towards the near-term market outlook, a market source told Mysteel Global.

Medium plate: Prices of medium plates are forecasted to remain largely stable this week, though mounting stocks may still weigh on the market. Most end-users only make procurements to meet their immediate production needs, and the imbalance between supply and demand has intensified as medium-plate inventories across the country generally moved higher during the long holiday.

Inventories of medium plates held by traders in the 35 Chinese cities under Mysteel’s tracking came in at 1.11 million tonnes over 1-8 October, jumping by 6.9% or 71,600 tonnes from 25-30 September.

Sections: Section prices are likely to run range-bound over 13-17 October. Market sentiment may stay relatively low, as few market participants believe in continuous price gains in the coming term. Lacklustre downstream demand persists after the holiday, with most end-users on the sidelines and only purchasing steel sections on a need-to basis.

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