Near-term outlook on China’s steel products

• Rainfall-led demand slowdown weighs on long steel prices
• Export orders and firm costs support HRC prices

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 post mild declines over June 1-5 driven by weakening market fundamentals. The recent rainfall across several regions of China and rising temperatures have put pressure on long steel demand and weighed on the prices. Meanwhile, mills’ long steel production is likely to hover high, posing pressure from the supply side. The sentiment lift from the stronger coking coal and coke markets is projected to offer some support though.

Hot-rolled coil: HRC prices may fluctuate within a narrow band this week. Lower end-user demand would intensify market cautions and apply pressure on HRC prices, while resilient orders from the overseas market and firm production costs would lend some support to the prices of the flat steel product.

Cold-rolled coil: CRC prices are likely to stay rangebound in the week ending June 5, with the room for price changes limited by thinning profit margins among steelmakers. Downstream demand stays subdued as most end-users have already replenished cargoes in advance amid the upbeat sentiment stemming from higher coking coal and coke prices, prompting most market players to stay wary.

Medium plate: Medium plate prices are expected to stay largely steady throughout June 5. While trader inventory pressure is still manageable, with the stocks posting continuous declines, actual demand for plates from the downstream sector remains low, strengthening market wariness in the near term.

Medium plate inventories held in commercial warehouses in 65 Chinese cities under Mysteel’s tracking came in at 2.49 million tonnes (mnt) as of May 28, dropping by 1.4% or 35,500 tonnes (t) on week.

Sections: Prices of steel sections are likely to trend downwards slightly over June 1-5. Most market participants adopt cautious stances towards the near-term market, mainly influenced by subdued spot transactions. Many traders prefer to offer discounts in order to clear their stocks and mitigate risks of further price declines, which could lead the section prices to drift lower.

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