China: Near-term outlook on steel products

• Longs prices may fall on tepid demand due to monsoon
  
  
• HRCs to stay range-bound on subdued demand, output
  
  

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 these two long steel products are projected to decline over 26-30 May. Some steelmakers may expedite maintenance work in response to narrowing margins, resulting in reduced long steel output. Meanwhile, demand is expected to weaken due to frequent rainfall and higher temperatures across many regions of China.

Most traders have adopted a cautious approach towards purchasing longs steel products and are keeping their inventories at low levels. However, some sources suggest that end-user restocking needs may surface ahead of the Dragon Boat Festival holiday (over 31 May-2 June).

Hot-rolled coil: Hot-rolled coil (HRC) prices are expected to remain range-bound through 30 May, with both demand and production appearing subdued. Inventories have declined further, largely due to limited arrivals, while downstream demand remains weak.

As of 22 May, HRC stocks at traders' warehouses in the 33 Chinese cities sampled by Mysteel fell for the second week, by 2.3% or 60,800 tonnes (t) w-o-w to 2.63 million tonnes (mnt).

Cold-rolled coil: Cold-rolled coil (CRC) prices are likely to fluctuate within a narrow range during the week ending 30 May, with output expected to remain high at approximately 870,000-880,000 t, while end-user procurement may stay steady.

Medium plate: Prices may show slight volatility in the week ending 30 May. Downstream buyers are primarily purchasing on an as-needed basis, and speculative buying activity remains limited. On the supply side, mills are expected to keep operations largely stable.

Output of medium plates among the 37 mills Mysteel checks edged up 0.3% or 4,000 t w-o-w during 15-21 May to 1.59 mnt.

Sections: Steel section prices may also experience small fluctuations this week. While production still hovers high, buying interest from building contractors is likely to stay cautious due to their tight cash flow and overall market conservatism.

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