China Domestic Prices: Referencing China Metals Weekly, as of March 29th month on month (m/m) long product prices were mostly down. Rebar was the exception rising 2.9% to $491 per tonne. Channel, 16# was down 2.0% m/m but was up by 48% on a year over year comparison. Beam, 25# fell 4.8% w/w, but remains 41% higher than one year ago. Wire rod ticked down 0.7% however prices moved up 43.0% over the year. Hot rolled coil prices have been declining and on a m/m basis were down 8.1% m/m reaching $486 per tonne.
Figure 1 illustrates the pricing history of Chinese pricing from 2015 to present. Prices bottomed-out on December 2015 at $230, then rose sharply topping-out at $416 in May 2016 before collapsing once again. The subsequent bottom occurred the first week of June 2016 at $270. Since then prices have exhibited a fairly steady advance, levelling at an average of $487 over the past five week interval.
Figures 2 and Figure 3 show the recent history for Chinese wire rod and merchant products respectfully. Both of these charts reveal a near mirror image of the rebar chart, rising and falling in lock-step with one another. Current pricing on March 29th for 50# angle was $494 per tonne, 25# beam at $477, $481 for 16# channel and $468 per tonne for 6.5mm rod. Higher raw material costs (coking coal, scrap and iron ore), together with stronger domestic demand and a number of pollution related restrictions have triggered these price increases.
China Metals Weekly reports that as the weather turns warmer, the demand for construction steel is showing signs of recovery. However as demand picks up so will steel mills production, keeping a lid on pricing. In addition, the intensified regulation on the real estate market and the withdrawal of monetary easing policy will lead to a wait and see attitude among steel traders.
At Gerdau we keep a keen-eye on Chinese steel production and pricing. China produces close to 50% of the world’s steel and as a result has a massive influence on global steel trade patterns. Imported steel volume and pricing has an influence on domestic steel so we routinely monitor it.