CHINA REBAR: Supply bottlenecks send prices upward

China’s rebar prices increased on Wednesday November 13 amid tightened supply caused by logistical bottlenecks, though market participants expect these to ease over the next few days.

Domestic
Eastern China (Shanghai): 3,780-3,830 yuan ($539-547) per tonne, up 80-90 yuan per tonne
Northern China (Beijing): 3,640-3,670 yuan per tonne, up 10-20 yuan per tonne

A trader in Shanghai said that a lot of cargoes shipped there from other parts of the country were still in the city’s ports due to transportation restrictions during the recently concluded China International Import Expo.

This has resulted in a shortage of many specifications of rebar in the spot market.

The supply shortage coupled with steady demand resulted in buyers being forced to raise their bids, which gave spot prices a boost, she said.

The trader expects prices to moderate over the next few days once these logistical bottlenecks are cleared.

Demand in the northern region was weaker in comparison with the east due to cold weather. As such, prices did not rise as much.

Export
Fastmarkets’ steel reinforcing bar (rebar) index export, fob China main port: $456.88 per tonne, up $3.88 per tonne

A trader based in Zhejiang province was of the opinion that most mills had set $460 per tonne fob as their lowest acceptable price, compared with $450-455 per tonne fob a day earlier, following the strengthening of the domestic market.

But short-selling traders could be willing to sell at around $455 per tonne fob, he said.

No bids were heard, with buyers said to be buying cheaper products from countries such as Turkey and Russia.

A source in Singapore said he had heard about a recent sale of Russian rebar to Hong Kong at around $420 per tonne cfr, which is equivalent to about $410 per tonne fob China on an actual weight basis.

Market chatter
“We don’t have much rebar export business now. It is impossible for us to export,” a second trader in Shanghai said.

Billet
As at 3pm, billet was being traded at 3,360 yuan per tonne including value-added tax in Tangshan, up 20 yuan per tonne from a day earlier.

Shanghai Futures Exchange
The most-traded January rebar futures contract closed at 3,442 yuan per tonne on Wednesday, down 7 yuan per tonne from a day earlier.