According to China Metals Weekly, as of March 15th month on month (m/m) long product prices are up across the board ranging from 11.5% for 16# channel to 16.2% for 20mm rebar. For reference 3mm hot rolled coil prices fell 3.4% m/m. On a year on year comparison total China steel prices were up 52.0%. Rebar advanced the most, +57.5%, hot rolled coil the least at +44.2%.
Figure 1 illustrates the pricing history of Chinese long pricing together with hot rolled coil pricing for comparison. Advancing raw material costs (coking coal, scrap and iron ore), coupled with a strengthened local demand and several pollution related curtailments have triggered aggressively price adjustments. Long product prices per net ton on March 15th were the highest since early 2014, (rebar US$492, wire-rod $493, angle $497, channel $502, beam $505), since April 2014. Hot rolled coil prices ($496 March 15th), rolled back from a recent high of $533 for the week ending December 14th, 2016.
Referencing China Metals Weekly, the Chinese economy looks to be gaining strength. Industrial enterprises grew 6.3% month on month and total domestic fixed asset investment (FAI) rose 8.9% year on year. Breaking down FAI, primary, secondary and tertiary industries moved-up by 19.1% 2.9% and 12.2% year on year. In general, raw material input pricing for steelmaking furnaces were under pressure this past week largely due to inventory builds as environmental based forced production cuts were mandated in some regions. Keep in mind China is a vast country and prices can vary quite a bit from one region to the next. For example 8mm wire rod prices ranged from $462 in Tianjin to $522 in Nanjing, a spread of $60 per net ton.
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.