China: Near-term outlook on key steel products

• Long steel prices projected to rise on pre-holiday demand
  
  
• Flat steel markets to remain cautious, mostly range-bound
  
  

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 strengthen over 27-30 April, driven by expectations for better supply-demand fundamentals and firm cost support. Long steel production still hovers at relatively low levels currently, while downstream demand is likely to improve further this week as some end-users may replenish stocks of steel longs ahead of the upcoming May Day holiday.

Hot-rolled coil: HRC prices are projected to be largely stable this week. The continuous decline in traders' HRC inventories indicates easing supply pressure in the market. HRC inventories at commercial warehouses in 55 Chinese cities under Mysteel's tracking edged down by 2.3% or 111,600 tonnes (t) on week to 4.73 million tonnes (mnt) as of 23 April.

Recently, robust exports of steel semis have also alleviated domestic supply pressure to some extent. Meanwhile, pre-holiday restocking by end-users is likely to underpin downstream demand this week, but a weak appetite for high-priced products will likely renew market caution afterward.

Cold-rolled coil: CRC prices are likely to stay largely stable in the week ending 30 April. CRC output from the 29 steel mills Mysteel surveys may stay largely steady at 880,000 t this week, indicating sufficient supply in the market. Overall market sentiment remains cautious due to moderate downstream demand, as end-users generally make purchases on a need-to basis.

Medium plate: Prices of medium plates are forecast to gain mildly throughout 30 April, supported by growing end-user consumption. However, with destocking only proceeding at a slow pace, most traders are expected to remain wary of the short-term medium plate market and continue prioritising inventory liquidation.

Sections: Prices of steel sections are likely to post small gains over 27-30 April, driven by firm cost support and expectations for pre-holiday replenishment. However, with higher prices and rebounding supply of steel sections following the removal of mandated production curbs in North China, traders prefer to focus on offloading their inventories in hand, leading to cautious sentiment.

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