CN building steel prices rise

On Shanghai market HRB335 20mm rebar prices have surged up to CNY 4500 per tonne to CNY 4510 per tonne while that for HRB400 20mm are being offered at CNY 4600 per tonne increased to CNY 160 per tonne and CNY 130 per tonne to CNY 150 per tonne. Commercial and hi speed wire rod prices have skyrocketed by CNY 160 per tonne to CNY 190 per tonne to CNY 4550 per tonne and CNY 4650 per tonne respectively.

As per report, following factors are contributing to this situation

Construction steel market is in a cost push environment.
Most Chinese steel makers are dependent on the overseas iron ore and they have to import more to carry out the increase in output even at the cost of being ripped off. While some believe that China's explosive growth in steel production has put a strain on the world's ability to supply iron ore.

 Robust demand
China has invested a lot in its infrastructure construction and this could ensure that most of the added output could be consumed. In addition, the ongoing urbanization; hot real estate industry and massive railway and subway construction nationwide would lead to better demand, which is believed to the major driver of price rise.

Slow growth in supply
On the one hand, the improving input cost is limiting the growth in output. Some smaller producers have to close off in face of sky-high raw material prices. On the other hand, there is not much increase in rolling capacity in rebar and wire rod, while some mini or smaller steel makers are forced to wash out on account of higher environmental protection thresholds. As a result, there is no need to worry about oversupply

 Rejuvenation of international market prices
The swift increase in the United States, Europe and Middle East along with the high market price level in South East Asia has reduced the impact of export tax tariff. Most steel producers still set aside part of allocation for exports so that they would not lose their overseas customers. Anyway, there is likelihood that strong exports would resume as long as there are enough big price gaps.

At the same time, rebar export offers are prevailing at USD 760 per tonne FOB up and it is expected to approach USD 780 per tonne to USD 800 per tonne FOB in the near future, reflecting the updated domestic prices.

Wire rod offers are being raised to USD 760 per tonne to USD 770 per tonne FOB and there is strong likelihood that it will aim at USD 800 per tonne FOB sooner or later. Some steel makers and traders are assuming special skills and tricks so that they could save most part of the export tariff or even enjoy tax rebate. Those 6.5mm to 8mm SAE1008 wire rod with boron element is being quoted at USD 750 per tonne to USD 760 per tonne FOB.