- Sluggish demand weighs on longs prices; mild inventories limit downside
- Flat prices remain range-bound as weak demand is offset by cost support
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: China’s prices of the two major long steel items are expected to fluctuate within a narrow range over June 22-26. Sluggish seasonal demand will remain the key factor weighing on long steel prices.
However, inventory pressure on steel traders is expected to remain mild, as actual arrival volumes of construction steel resources stay relatively low in June, which is likely to ease part of the downside pressure on long steel prices. This is also reflected in declining retail inventories, while stocks held by mills continue to accumulate.
In addition, the latest round of coke price hikes initiated by Chinese coke producers last Friday and set to take effect this Monday will also provide some cost-side support.
Hot-rolled coil: Chinese HRC prices may hover around current levels this week. Subdued downstream demand has increased market caution and is likely to prompt some sellers to cut offer prices to secure deals. However, higher coke prices will provide firmer cost support and limit room for further price declines.
Cold-rolled coil: CRC prices are likely to edge down over the week ending June 26 amid weak market sentiment and rising retail inventory pressure in the short term. Some traders have lowered their offer prices following weaker HRC futures, but this has failed to stimulate end-user buying interest, indicating subdued actual demand for flat steel products. This has led to an accumulation of CRC retail stocks.
CRC inventories held by traders in commercial warehouses across 29 Chinese cities under Mysteel’s tracking reached 2.41 million tonnes as of June 18, up 0.8% or 19,000 tonnes on week. This marked the only on-week increase among the five major finished steel products including rebar, wire rod, HRC, CRC, and medium plates under Mysteel’s survey.
Medium plate: Medium plate prices are expected to fluctuate over June 22-26. Despite an on-week increase in apparent consumption last week, most market participants remain cautious about the near-term outlook and are inclined to offer discounts to facilitate sales,which may continue to pressure prices.
Sections: Steel section prices are likely to see mild declines over June 22-26. Weak downstream demand, disrupted by seasonal heavy rainfall and high temperatures in some regions across China, is expected to keep inventories at relatively high levels despite low production. In addition, falling billet prices will weaken cost support, indicating further downside risks for section prices.
Note: This article has been published in accordance with a content exchange agreement between Mysteel and BigMint.
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