According to Mr Lu Zhangfu market analyst at Hangzhou in Zhejiang province prices for rebar may continue dropping with small amounts before Chinese traditional Spring Festival, and traders should keep more cautious when participating the future market.
In Hangzhou market, rebar prices were on the decline these days. And now, 16mm to 25mm II grade product is falling back to CNY 3,760 per tonne and that of III grade at CNY 3,800 per tonne with no signs of price stabilizing.
What’s the fundamental element caused the prices of rebar to fall in the market?
On one hand, the actual demand was short, with thin transactions, especially approaching the Spring Festival. On the other hand, the social inventory was adding up to 0.55 million tonnes in the city, plus wire rods the total amount has surpassed 0.6 million tonnes hitting a historical record high. And the figure was predicted to move up to 0.9mt after the lunar new year.
So, the prices may continue going down with fluctuations in the future days. And Mr Lu believed that the rebar would eye a decline of CNY 100 per tonne with II grade product expected to fall back at CNY 3,660 per tonne. He said that nevertheless, the supply has exceeded real market demand which cannot be eased before or after Spring Festivals.
Mr Lu suggested to the traders that they had to maintain cool headed attitudes towards the future market, without blind operation trying to control the social stocks at a reasonable level.