August 30, 2008

Rebar prices in Shanghai market to move up in April 2008

It is reported that Mr Wu Haiyun GM of Shanghai Baoqiao Steel Co said the current fluctuations in Shanghai's rebar market are normal and there will be an upward move in April 2008. Mr Wu said given previous jumps, present adjustments are quite natural and the II grade rebar has already slumped to CNY 4700 per tonne hitting the bottom line. He said his company is sourcing some 200 tonnes to 300 tonnes a day from the market.

Mr Wu gave following reasons explaining why the market would experience an upward course in April 2008.

1. In Shanghai, there will be 94 municipal engineering projects at cost of CNY 30 million to be constructed which is expected to expand steel demand, especially rebar.

2. The ex works price again exceeds the market price. The traders have sold out low priced resources and face higher purchasing cost for future sales. March 21st 2008 Shagang's ex works price for rebar is standing at CNY 5020 per tonne in contrast to market price of some CNY 4700 per tonne to CNY 4730 per tonne

3. The stock is not high, while new arrivals for next period will be limited. Rebar stocks in Shanghai is reducing by 50,000 tonnes during the past two weeks. In January to February China's outputs of rebar and wire rod posted 14.1254 million tonnes and 11.798 million tonnes up by 0.4% YoY and 1.2% YoY. In specific, Beijing, Tianjin, Shanxi and Jiangsu Provinces saw 10% decline for February daily output.

4. The raw materials remain high perched. Prices for power and coking coal stand firm amid tight supply, while billet and pig iron also keep steady, bolstering the ex works price and the market price consequently. Some smaller rerolling plants are cutting or suspending productions, so as to deduct future supply.

5. Price in the international market holds on a track. Export offer of rebar from CIS gained USD 180 per tonne last week. At present, the order price for April or May shipment is USD 920 per tonne to USD 930 per tonne while export offer already climb to USD 950 per tonne to USD 960 per tonne. In other regions of Europe, the local sales price gained some EUR 30 per tonne to EUR 570 per tonne to EUR 600 per tonne compared with EUR 540 per tonne to EUR 570 per tonne two weeks ago.

(Sourced from MySteel.net)