HBIS issued price policy in the first ten days of July, narrowing price gap between second grade and third grade rebar to CNY 50 per tonne. On Beijing market, third grade rebar kept the same price level with or lower price than second grade rebar.

The latest price policy of HBIS showed it cut down CNY 70 per tonne for wire rod down CNY 120 per tonne for coil bar down by CNY 30 per tonne for second grade rebar and down CNY 180 per tonne for third grade rebar.

Market participants said imbalance between steel makers production plan and market’s inventory caused narrow price gap. And some insiders said it showed second grade rebar still has market.

In general, price of third grade rebar is always higher than that of second grade rebar due to different costs and quality, for instance, Shougang Jan price policy showed price of 18mm to 25mm third grade rebar was CNY 169 per tonne higher than that of second grade rebar. Actually, price gap of CNY 100 per tonne to CNY 300 per tonne is a normal margin.

In early March when steel prices were in falling trend, on Beijing construction steel market third grade rebar sold cheaper than second grade rebar.

Analyst of Mysteel said it was due to higher inventory pressures of third grade rebar on Beijing market. After that, HBIS issued warnings to adjust production ratio of second and third grade rebar, balancing inventory rate of them on Beijing market, bringing price gap into normal range.

Though the direct reason was the production plan and inventory changes, the demand for second-grade rebar is another important factor to bolster its prices.

(Sourced from MySteel.net)
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