According to Mr Liang Taigeng the general manager from Shanghai Hualei Enterprise Development Co Ltd, “According to present construction steel market, it is predicted that Shanghai rebar prices may climb up after Spring Festival, but without much fluctuations. From the Spring Festival to March, the price fluctuation would be about CNY 100 per tonne."
Mr Liang Taigeng said that at present Shanghai rebar market now is in the phase of reaching bottom and adjustment. Especially now the Spring Festival is approaching, and rebar prices is also falling, until now the prices has decreased by CNY 150 per tonnes which is far beyond expectation.
The main reason of this early adjustment is the shrinking market demand. This period of time is the off-season for construction market with weak demand, plus the weather effect of heavy snow and strong cold air, construction work is difficult to carry out, and recently large number of migrant workers start to back home for Chinese lunar new year, some construction projects has been suspended, so that the demand for rebar is decreasing obviously market prices fall consequently.
Mr Liang said "The increased stockpile, highlighting the contradictions between supply and demand with more market pressures forms another reason for the rebar prices declining before the festival.”
He said that recent Shanghai rebar inventories had increased to more than 700,000 tonnes, in which grade 3 rebar is of about 270,000 tonnes up 20,000 tonnes to 30,000 tonnes to last period of time. Inventories are increasing, while the market demand does not increase, but decrease, then the price drop is inevitable.
Reporter asked "Then, why the rebar prices at Shanghai market will rise up after the Spring Festival?"
Mr Liang explained from the below factors.
1. The traders’expectation. Most of the traders are optimistic about the post-Festival market. Before the Festival, whole market entered a consolidation and adjustment process, rebar prices is also reaching the bottom, but this wave of adjustment is much greater than expected and made good preparations for a rebound, the traders are keen and anxious to lift the prices, so it is estimated the first few days after the Festival, rebar market price will be on the upward track quickly.
2. The growing price gap between the steel mills and market.
Now traders have no room to lower the prices. Last several months, steel mills lifted up their ex-factory prices one after another, which are generally higher than the market price, this phenomenon is very serious.
3. The rebar demand post-Festival will be better pre Festival.
After the Spring Festival, with the weather gradually warmed up, the construction project work will restart or start for new ones, the demand then will gradually increase which will be a strong internal drive for the market rebound.
Mr Liang explained that considering the above factors, after the Spring Festival, Shanghai’s rebar prices are likely to grow up fast, about the duration and growth rate of this fluctuation depends on the supply and offer situation, weather condition and the traders’ attitude. In general, the growth rate won’t be too much, and the duration maybe very short, probably elusive, and soon fall down again, and experience the market readjustment.
Mr Liang said that for February and March, the rebar market frequency of fluctuation is relatively high. For the operators, they have to handle it accordingly, take prompt reaction about the new market change and grasp the next fluctuation to minimize losses and make up price gap effectively.