Shagang rolls over long steel list prices for late-Feb sales

Shagang Group (Shagang), China's leading privately-owned steelmaker and largest electric-arc-furnace steelmaker, has decided to hold its long-product list prices for sales over February 21-28 unchanged from the previous ten-day period, the company announced last Saturday.

The Zhangjiagang-based steel group updates its longs list prices three times a month to better reflect market dynamics, as reported. Shagang has maintained its long steel prices at the same levels since late September last year, a move market watchers suggest reflects the company's cautious stance toward the near-term market after the Chinese New Year (CNY) holiday.

Consequently, Shagang continues to keep its price for HRB400 16-20mm rebar at Yuan 3,450/tonne ($502/t), its HPB300 6-10mm wire rods stay priced at Yuan 3,470/t, and its HRB400 8-10mm bar-in-coil is still at Yuan 3,560/t, according to its announcement. All prices are EXW and include the 13% VAT.

The primary reason for the steel giant's decision to hold their offer prices in the last eight days of this month was that downstream demand for long steel items is expected to remain subdued towards the month's end as many building contractors may not resume business until after March 3, the Chinese Lantern Festival, according to market sources.

Tepid demand, coupled with increased steel output, led to a clear inventory accumulation of construction steel items, though the accumulating pace was the slowest over the CNY festival in the last five years, Mysteel's survey results showed.

Combined inventories of rebar and wire rod held by traders in their commercial warehouses in the 35 Chinese cities under Mysteel's coverage climbed by 16.7% or 812,800 tonnes over the CNY holiday to hit 5.69 million tonnes as of February 23.

Elevated inventory levels have posed some pressure on traders who take wary approaches in the short term and prompted them to lower their offer prices to liquidate stocks after the holiday, Mysteel Global noted.

For instance, on February 24, Mysteel assessed the spot price of HRB400E 20mm rebar in Shanghai – a major market for Shagang brand rebar – at Yuan 3,210/t including the 13% VAT, down by Yuan 10/t from the level on February 10.

Source:Mysteel Global