Chinese longs suppliers still keep domestic quotations steady, seeing a decrease in purchases by traders, whose stocks dwindle at a slower pace now. At the same time, suppliers of sections have attempted a rise saying the June increase in prices for their material was not so fast as that in rebar and wire rod quotations. In particular, Shagang Group, Yonggang Group, Nanjing Iron & Steel and Rizhao Steel have unanimously announced that their current longs quotations will remain unchanged. At the same time, Jigang Group's sections have gained $5/t (RMB 30/t) w-o-w and Laiwu Steel's H-beam – $12/t (RMB 80/t).
Nevertheless, market players are sure that domestic prices for longs will continue to move up next week although there is little room for a further growth. Their expectations are due to the fact that prices for iron ore have upped. Besides, buyers' demand is expected to rally in the southern provinces for the country. Furthermore, in mid-August two major local producers, Wuhan Iron & Steel and Anshan Iron & Steel, announced a hike in prices for September output of wire rod. Consuming industries are still highly interested in buying the material despite slower implementation of state construction programmes. Production of longs has increased amid dwindling stocks, which is another sign of improvements in the segment. In January-July 2011 China’s output of rebar and wire rod increased by 16.7% y-o-y and 15.4% y-o-y respectively, to 85.783 mt and 69.841 mt.
Traders have not dared to take active moves either. Moreover, they have reduced rebar offers to local buyers by $5/t. However, re-sellers are likely to support mills in early September, the latter setting prices just by $5/t lower than stockists do at the moment (the difference was $9/t a week ago).
Market players make rather optimistic long-term forecasts. In particular, the Chinese government focuses on active development of the construction sector and aims to speed up implementation of construction projects by 15% within the next five years. Rebar is forecast to account for about 45% of total steel product consumption in China. The positive economic situation in the country will only support it: the growth of GDP will be about 9.28% this year and 8.91% next one.
( Source: www.metalexpert-group.com )