China: Near-term outlook on steel products
...
- Construction steel prices supported by cost pressure
- Flat steel prices remain stable amid cautious demand
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 25-29 May. Market concerns over coking coal supply have intensified, which could support the market on the cost side. Output for construction steel items is likely to recover this week, while downstream demand may contract further as seasonal rainfall disrupts outdoor construction activity. Despite signs of weakening, supply-demand fundamentals for steel longs are expected to stay under limited pressure, given the continuous inventory drawdown.
Combined inventories of rebar and wire rod piled in commercial warehouses in the 35 Chinese cities under Mysteel's tracking thinned further for the tenth week, with the tonnage easing by 5.4% or 315,100 tonnes (t) on week to sit at 5.53 million tonnes (mnt) as of 21 May .
Hot-rolled coil: HRC prices may be rangebound this week. Market caution intensified last week, pressured by the softening of futures prices. However, market fundamentals have improved slightly due to rising downstream demand, a trend set to persist in the short run, providing upward strength for HRC prices alongside resilient cost support.
Cold-rolled coil: CRC prices are likely to stay within a narrow range in the week ending 29 May . Most end-users opt to replenish CRC cargoes only on a need-to basis in the past week, and speculative purchases also waned amid the weak futures market. For this week, market demand may remain largely steady, leaving limited room for price fluctuations.
Medium plate: Medium plate prices are expected to see minor fluctuations throughout 29 May. Last week, downstream demand for medium plates edged down slightly from the previous week, as market sentiment turned more cautious. Most traders are now prioritizing the reduction of their existing stockpiles.
Sections: Prices of steel sections are likely to be underpinned by cost support over 25-29 May despite weak market fundamentals. Seasonal rainfalls across several parts of China have greatly interrupted operations among outdoor projects, leading to weakening end-user demand. As such, prevailing market wariness has led most traders to offer discounts to liquidate their stocks, while most downstream users only show interest in low-priced products.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
