Price trend
According to the price monitoring of SunSirs, this week (July 13-17), the prices of rebar and wire rod in Jiangsu, Zhejiang and Shanghai rose first and then fell. As of the 17th, the average price of HRB400 rebar in Jiangsu, Zhejiang and Shanghai was about 3,570 RMB/ton, down 0.17% by about 10 RMB/ton from last week; the average price of HPB300 wire rod was about 3,760 RMB/ton, down 0.31% by about 10 yuan from last week RMB/tonne. On the whole, the average price of this week has increased significantly compared with the beginning of July. The average price of rebar has increased by 1.54% about 55 RMB/ton, and the average price of wire rod has increased by 2.36% about 90 RMB/ton.
Analysis review
In terms of steel mills, in early July, Tangshan issued a one-month policy on production restriction and shutdown of steel mills. According to the China Iron and Steel Association data, as of early July, the key statistical steel companies produced a total of 21.307 million tons of crude steel, with an average daily output of 2.1307 million tons of crude steel, a month-on-month decrease of 0.53% and a year-on-year increase of 5.81%. Crude steel output fell for two consecutive weeks. As of July 17, the operating rate of rebar mills was 75.41%, a week-on-week decrease of 0.66%, and the weekly output was 3,829,600 tons, which was down 1.41% from the previous week; the operating rate of wire rod mills was 66.27%, which was down by 2.96% from the previous month, and the weekly output was 1.5498 million tons. The month-on-month decrease was 1.8%. The operating rate and weekly output fell further, alleviating part of the pressure brought by high supply.
In terms of inventory, the high point of rebar inventory in 2020 appeared in mid-March, followed by a three-month rapid destocking phase. Rebar fell to a minimum of 10,425,900 tons in mid-June, and then began to rebound. As of July 17, the total inventory of rebar reached 11.72113 million tons, of which the steel mill inventory was about 3.3 million tons, a decrease of 107,000 tons from last week, and the social inventory was about 8.41 million tons, an increase of 244,500 tons from last week; the total inventory of wire rod reached 2,734,400 tons, of which the steel mill inventory was about 700,000 tons, and the social inventory was about 2.02 million tons. Due to the unsatisfactory destocking in the early stage, when the demand is off-season, steel mill inventories are transferred to social inventories, and downstream consumer demand continues to decline, resulting in an increase in total inventory of rebar and wire rod.
According to dealers, the sales price of snails on the 17th was reduced by about 10 RMB/ton from yesterday. Despite the current situation of weakening demand and accumulation of social inventories, due to the country’s flexible and appropriate monetary policy, under the condition of a warmer macro environment and relatively loose funding, traders’ expectations for the future steel market are still relatively optimistic. It is hoped to actively replenish stocks to build up inventory to sell products after the off-season in steel prices. In addition, the A-share market and the futures market have been operating strongly recently, and the warm market atmosphere has driven the spiral price to fluctuate higher since July.
Market outlook
Under the influence of favorable macroeconomics, strong raw material prices and declining output, dealers are not pessimistic, but the contradiction between supply and demand of high inventory and high output still exists, and the fundamental situation of oversupply will continue to return in the future. It is expected that the spiral price will fluctuate within a narrow range in the short term, and it will run steadily and weakly.
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