On 28 July in Shanghai 20mm HRB400 rebar was selling at CNY 3,680-3,710/tonne ($546-551/t), up just CNY 5/t from a week earlier and up CNY 160/t over the month. 5.5x1,500mm Q235B hot rolled coil meanwhile was trading at CNY 3,790-3,830/tonne ($563-569/t), up CNY 45/t from a week earlier and up CNY 285/t from the end of June. Traders say demand, although not strong, is always there every time prices dip. Trading on Friday was continuing despite it being the end of the month, when buyers often shun deals for which an official tax invoice is not available. Traders have set fairly modest daily sales volume targets over the last week as they still expect prices to improve further.
Traders complain that mills are restricting supply to the market to support prices. One reason is ongoing plant maintenance. Shanxi Taihang Iron and Steel was the latest to report a shut down. It is banking a 530 cubic metre blast furnace and one wire rod and one rebar line for maintenance, with an impact of around 4,000 tonnes/day. It did not say when the capacity would resume. Mills are aware that they should be able to increase supply to the market in the run up to the October holidays and hope to keep prices as high as possible until then.
On export markets too mills have kept their offer prices high, although some traders were willing to negotiate deals slightly below mill offers. In the last week of July, Chinese mills were heard offering at $525-530/t fob for 2mm rerolling grades, but traders were offering lower at around $520/t fob. These offers were still struggling to compete however with Indian offers into Vietnam of around $520-540/t cfr for 2mm re-rolling grades. One Indian deal was confirmed concluded at $540/t cfr Malaysia mid-week. 2mm SAE1006B was assessed at $510-520/t fob, flat from the previous week but now up $45/t from the end of June.
Seaborne iron ore prices meanwhile have also been supported by Chinese prices. The Kallanish index for 62% Fe Australian fines slipped $0.34/tonne to $68.44/dry metric ton cfr Qingdao on Friday. This was still $6.41/t higher than the end of June however. The iron ore market remains fundamentally well-supplied, and port stocks have continued to hover around 140 million tonnes. China’s steelmakers however are preparing for the next seasonal cycle in domestic demand. With the expected recovery of demand around and after the October national holiday, steel traders typically restock. That means steelmakers, which are currently seeing more maintenance, are not too concerned about increasing output in the coming weeks. That in turn means a continued willingness to buy and a continued preference for high grade ores to boost production levels. If steel prices perform well in August-September, iron ore could top $70/t once more.
Source： www.kallanish.com