China Metals Weekly (CMW), August 31st newsletter reported that long products prices continued to move-up briskly on all product lines on a month over month (m/m), basis. Angles advanced 15.8% to $599 per ton, channels jumped 16.0% to $592. Beams rose 15.6% to $584. Wire rod priced increased 11.7% to $570 and rebar increased by 9.4% to $550 per ton. Bucking the trend, hot rolled coil (HRC) fell 5.9% to $396 per ton.
On a week on week (w/w), comparison, wire rod moved higher by 0.4%, rebar rose 0.6%, angles rose by 2.1%, channels increased by 2.1% and beams advanced by 1.8%. HRC tumbled 7.2%.
Over a year on year, (y/y) period, long product prices were up by an average 61.2%. Rebar and wire rod each moved-up by 67.3% y/y. This increase represents a $229 per ton increase for rebar a $221 per ton escalation for rod. For channels, the increase y/y was 60.3%, ($222 per ton), angles 59.2%, ($223 per ton) and beams, 51.9%, ($200 per ton). The y/y change for HRC was just 0.8%, $13 per ton.
Figure 1 shows the price history per net ton for longs and HRC from 2014 to present. Long product pricing is surging higher while HRC is trending lower. Currency is not the reason for the increased pricing. The Yuan has moved very little against the US$. The exchange rate was 6.678 Yuan, (or RMB) per US$ a year ago. The rate was 6.601 Yuan per US$ today, a 1.2% difference.
Figure 2 breaks-out domestic beam prices from major Chinese mills from 2015 to present for three reference sections. These include: Beijing Laiwu Mill (100 X 100 section), Beijing Maanshan Mill (400 X 400) and Shanghi 25#. Current pricing for these products on August 30th were $711 per ton for 100 X 100, $658 per ton for 400 X 400 and $584 per ton for the 25# beam.
The rapid price increases stem from production curtailment for pollution restrictions coupled with stronger demand since it is peak construction season.
Referencing China customs, exports of bar, rebar and wire rod in July were up by 4.6%, 225.1% and down by 10.3% m/m to 695,941t, 14,584t and 533,309t respectively. Total exports of bar, rebar and wire rods were 6.629Mt, 115,241t and 4.215Mt respectively during the past seven months of this year, down by 68.5%, 10.2% and 38.6% y/y. The export of all shapes and sections were 113,668t and 158,196t respectively in July, up by 3.2% and 3.9% m/m. Total exports were 613,545t and 1.559Mt during the past seven months of this year, an increase of 9.9% and a decline of 39.5% y/y.
At Gerdau we keep a keen-eye on Chinese steel production and pricing. China produces close 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.