Chinese domestic longs market moves steadily up

China's domestic long products market has maintained its steady upward movement in the past week, against the background of a stabletradingvolume and decreased inventory levels. Meanwhile, local mills have continued to raise their ex-factory prices.

In spite of the flattradingperformance,China's domestic long products market continued to rise in the past week, mainly on the back of the mills' increased ex-factory prices. In northernChina, Hebei Steel Group hiked its ex-factorywirerod andrebarprices considerably at the end of the week, giving obvious strength to the local market.

At the beginning of the past week, faced with the frequent arrivals of new materials in the Beijing and Tianjin markets, most traders kept their prices unchanged in order to ensure normal levels of sales. However, with the unexpected announcement of an upward adjustment by Hebei Steel Group to its July prices at the end of the week, traders began to limit their sales volumes. As a result of its direct supplies to key national projects like the Beijing-Shanghai Express Railway, Hebei Steel Group has sharply cut supplies to its distributors since the beginning of 2009, resulting in continuing tight availability of supplies in the market. In this context, most traders seem to be reluctant to sell their materials.

The situation in the markets in other regions in the country is similar to that in northernChina, with only variations seen in the increase margins.

As regards raw materials,China's domesticpig ironmarket remained on the rise throughout the past week, while localscrapprices were generally stable with minor fluctuations against a background of relatively tight supply; finally,China's localbilletmarket was characterized by a general stability, accompanied by normal levels oftrading.

Overall, the mills' price hikes constitute the main factor helping to boost upChina's domesticlongsmarket. In addition, the latest upward adjustment announced byShagangon July 11 to itslongsprices for mid-July will also help to push up the domestic market. As a result, Chinese long product prices are expected to continue their ascension during the coming week.