Chinese wire rod export prices see massive drop

Posted on 07 February 2020
 

Source: Kallanish

China's wire rod export prices have seen a sharp decrease after the Chinese New Year holiday, as traders lose confidence and steel market inventories rise rapidly, Kallanish notes.

Chinese traders can now mainly supply non-alloy wire rod from the Tangshan area, and offer prices are at about $450-455/t fob China. Eastern China's traders say offers from the two major suppliers in the region are at $460-465/t cfr Vietnam, and the shipping cost is about $10-11/t. Affected by the Wuhan virus, mills have not resumed production, but most traders have started working from home.

Wire rod from Tangshan was concluded at $450/t cfr Vietnam this week, a Vietnamese trader says. Another Chinese trader confirms to Kallanish the indicative transaction level of Chinese wire rod is now at around $440/t fob China. Another Chinese mill source believes the price is feasible. He says: ''Although the lowest price I've heard so far is $458/t cfr Vietnam, traders are shorting the market, so $450/t cfr Vietnam is achievable.''

Not only are traders short selling non-alloy wire rod from Tangshan, they are also short selling alloy-added wire rod from northern China's state-owned steel mills. The latest offers for two major mills are at $495/t and $485/t fob China, but these are not the actual transaction prices of the mills. These mills are expected to officially announce their offers next week.

Although the mills' guidance prices are not yet clear, some small traders have announced they can provide March shipments at $460-470/t fob China. However, some large Chinese traders believe that short selling northern mills' alloy-added wire rod is very risky.

Chinese market participants believe prices will remain weak due to active destocking in the short term, but long-term trends need to be judged based on the development of the virus. A trader says that if the virus is controlled in the short term, steel prices could usher in a sharp rebound.

On Thursday, 6.5mm diameter mesh grade wire rod was assessed at $440/t fob China, down $45/t from before the holiday.

  



«  Back

Copyright © 2016 SEASI Site. All Rights Reserved.