Near-term outlook on China's steel products

Below is the brief near-term outlook for five key steel products Mysteel shares on a weekly basis, drawing upon the results of related surveys and communication with Chinese market participants.

Rebar & wire rod: Prices of long steel may maintain the uptrend overall over December 19-23, as trading is expected to hover at the current level with steady consumption from end-users and active speculative buying driven by improved performance in both physical and futures markets.

Mysteel's survey showed that the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among 237 Chinese trading houses averaged 149,621 tonnes/day over December 12-16, higher by 1,934 t/d or 1.3% from the prior week.

Hot-rolled coil: This price is likely to fluctuate during the week ending December 23, as speculative demand may decrease and the imbalance between supply and demand may gradually emerge.

However, HRC stocks are unlikely to see any significant accumulation in the near term thanks to the replenishment of users, which may lend some support to Chinese HRC prices. As of December 15, HRC stocks at 194 warehouses in 55 Chinese cities under Mysteel's tracking stood at 2.8 million tonnes, down by another 1.5% on week.

Cold-rolled coil: The price may strengthen this week thanks to the positive sentiment in the domestic market and better speculative demand.

Chinese CRC producers continued to lift their list prices last week and kept their production stable after noting the improvement in sales. Over December 8-14, output among 29 CRC producers under Mysteel's tracking had increased for the second week to 821,300 tonnes, up another 1,200 tonnes on week.

Medium plate: The price may soften somewhat over December 19-23 given the intensified imbalance between supply and demand.

Some Chinese suppliers may prefer to concede somewhat in their offering prices to facilitate sales and to reduce their stocks at hand, considering lackluster demand from downstream users and the sharp rise in prices over the past week.

Sections: Prices are estimated to retreat this week due to increased pressure from the supply side and weakening demand during the traditional low-season for steel consumption, which may result in the accumulation in mills' stocks with high-level output and limited restocking demand.

Written by Nancy Zheng, zhengmm@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.