SHANGHAI, May 10 (SMM) – Market sentiment remained buoyant even after rebar spot prices slumped as traders were keen to destock. Transactions were few across several markets in China on Wednesday May 9. Prices in Hangzhou dipped 80 yuan/mt to 3,970 yuan/mt and prices in Shanghai fell 60 yuan/mt to 3,960 yuan/mt, SMM learned.
In Hangzhou, rebar spot prices slumped 160 yuan/mt on Wednesday from 4,130 yuan/mt at the beginning of May, SMM learned. Cargoes traded at an average 4,058 yuan/mt in early May, about 50 yuan/mt lower than the ex-factory prices reported by steel mills.
Market participants took a relatively bullish outlook as inventories of rebar declined continuously and as several specifications were in short supply in some regions. We expect one of China’s major steelmakers, Jiangsu Shagang, to raise ex-factory prices by 50 yuan/mt in mid-May, to 4,020 yuan/mt. Its price, ex-warehouse, will be offered at 4,070 yuan/mt.
Some steel mills remain suspended for environmental probes that began at the start of April. Demand released steadily as downstream construction sites in south China hastened their progress before the rainy season in June, SMM learned.
Based on prices of $67.3/mt for imported iron ore, average profits for rebar stood over 1,100 yuan/mt on May 9 at steel plants, up 22% from a month ago. Rebar processing costs at some steel mills stood at 2,860 yuan/mt.
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