Near-term weekly outlook on China's steel products
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- Weak seasonal demand weighs on prices, inventories rise
- Cost support and output cuts limit downside risks
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 be slightly volatile over 8-12 June. Contracting downstream demand for long steel items amid the summer lull is likely to curb the inventory circulation from steelmakers to traders and consequently uplift mills' long steel stocks even as output eases, similar to last week. But cost-side support will remain strong and continue to provide some upward momentum for construction steel prices.
The combined stocks of rebar and wire rod held by 137 steel mills sampled by Mysteel accumulated again over 29 May-4 Juneafter a short-lived decline in the previous week, with the tonnage gaining by 1.9% or 41,700 tonnes (t) on week to 2.29 million tonnes (mnt) as of 4 June.
Hot-rolled coil: HRC prices may stay under downside pressure this week. Seasonal rainfalls in southern China and widespread high temperatures across the country are expected to keep suppressing HRC demand, which could extend the ongoing inventory accumulation of the flat steel product. In addition, stricter Indonesian anti-dumping measures also cast clouds on Chinese HRC exports in the near term.
HRC inventories held by traders in commercial warehouses in the 33 Chinese cities under Mysteel's tracking amounted to 3.43 mnt as of 4 June, gaining for the third consecutive week by 1.7% or 58,100 t on week.
Cold-rolled coil: CRC prices are likely to post small declines over the week ending 12 June. Sluggish downstream sales and weak sentiment have limited end-users' interest in replenishing CRC stocks, with many only purchasing on a need-to basis. This has intensified caution among CRC traders and enticed them to secretly lower their offering prices in order to facilitate sales.
Medium plate: Medium plate prices are expected to be slightly volatile throughout 12 June. The apparent consumption of medium plates showed slight on-week declines last week, leading plate sellers to focus on liquidating their in-hand stocks amid cautious market sentiment.
Sections: Prices of steel sections are likely to extend mild declines over 8-12 June. Subdued demand will be a major drag on section prices this week, while fading cost support may also pose a negative impact. On the other hand, steelmakers have proactively cut their output of steel sections amid low demand, but most of them have strong wills to firm prices as they only enjoy minimal profit margins, which would offset part of the adverse impacts on prices of steel sections.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
