SHFE rebar prices static, demand outlook stays bleak
Source: Mysteel
Aug 23, 2019 17:30
“Stocks kept declining this week, thanks to further drops in production, which gave a moderate boost to steel futures prices,” a Shanghai-based ferrous analyst said. “However, the current declines in output and stocks are not strong enough to reverse the weak fundamentals while the summer heat and rains continue,” he stated, adding that stock levels were much higher compared with this time last year.
Rebar stocks at the 137 long steelmakers that Mysteel monitors declined for a second week as of August 21, falling by another 11,600 tonnes on week to reach 2.6 million tonnes, but still some 60% higher on year, Mysteel’s latest stock survey showed. Inventories at traders in 35 cities also witnessed a two-week decline, slipping by another 58,900 tonnes on week but still higher by a large 44.4% on year at 6.3 million tonnes.
In the meantime, rebar production among those 137 mills declined for a third successive week, easing by another 2.4% on week to 3.5 million tonnes over August 15-21.
Going forward, the collapse of imported iron ore prices might also result in steel prices losing ground, Mysteel was told.
The decline in finished steel prices has already forced electric arc furnace steelmakers to sharply reduce production, but the output declines resulting from that could not effectively improve fundamentals, according to the analyst. The weak trend for raw material prices is helping the steelmakers’ production costs but might further drag down steel prices as well, he warned.
The most traded iron ore contract on the Dalian Commodity Exchange on August 23 for delivery in January 2020 declined by Yuan 19/t from the settlement price the previous Friday to close at Yuan 604/t.
Over the same period, Mysteel’s national average price for HRB400 20mm dia rebar hit a 17-month low on August 22 to reach Yuan 3,806/t including the 13% VAT, also down Yuan 36/t on week.
Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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