1. Price trend

According to the price monitoring of SunSirs, in May, the price of wire rod and rebar rose first and then fell, and fluctuated in a narrow range. As of the 29th, the average price of HRB400 rebar in Jiangsu, Zhejiang and Shanghai was 3069 RMB/ton, down 3.59% from the beginning of the month; the average price of HPB300 high wire was 3252.5 RMB/ton, down 3.7% from the beginning of the month.

2. Factors affecting prices

According to the above figure, in May, the weekly output of wire rod and rebar and the total inventory of wire rod and rebar both decreased.

Supply

As of May 29, the weekly output of rebar decreased by 59,700 tons to 2.2551 million tons, and decreased by 78,700 tons from the previous month; the social warehouse decreased by 218,700 tons to 3.9459 million tons, and decreased by 762,500 tons from the previous month; the factory warehouse decreased by 13,000 tons to 1.8646 million tons, and increased by 133,000 tons from the previous month.

Last week, the output of building materials was 3.1975 million tons, and the output increased by 3.13% from the previous month, and the output continued to grow. In terms of rebar, the output of rebar increased slightly by 49,500 tons, among which the output growth rate in East China and North China was the highest. In terms of provinces, the increase in Jiangsu, Hebei and Anhui was more obvious, and the fluctuation range of output in other regions was relatively small; in terms of wire rod, in terms of supply, the output of wire coils increased slightly last week, with a total increase of 47,600 tons. From a regional perspective, the increase is mainly concentrated in East China and Northeast China, with supply increasing by 35,000 tons and 17,500 tons respectively. At the same time, the output in North China decreased the most, mainly due to production line maintenance and unsaturated production, with a supply reduction of 16,100 tons. The output in other regions fluctuated slightly. In the short term, rebar production may remain high.

Macro aspect

The start-up of downstream construction sites in May was reduced, the overall steel demand was reduced, the fundamental data showed seasonal changes, the market sentiment weakened, and the operation was mainly fast in and out, and the willingness to actively support prices was insufficient.

Demand aspect: Last week, the national average weekly transaction volume was 94,920 tons, a slight decrease from the previous week, and the transaction situation deteriorated. The transaction volume fell back to 90,000 tons. Although the downstream terminal demand is still being released, it is showing a weak trend. The main reason is that the weather has entered the rainy season at this stage, and the release of terminal demand has weakened.

3. Market Forecast:

In terms of supply, the steel mills' own profits in May were still acceptable, and the current production scale was maintained, and the supply may increase; in terms of demand, the market began to enter the traditional off-season in June. Due to the weather, the downstream operation was limited, and the downstream purchases became less and more concentrated, and the release of demand slowed down. The inventory maintained a downward trend, the market mentality was cautious, and there were more quick-in and quick-out operations, but the real estate capital chain problem continued, and the release of demand in June was limited.

In summary, under the expectation of limited terminal operation in June, the fundamentals of building materials turned to supply increase and demand reduction, the market speculation sentiment was cautious, and the macro game was likely to intensify: wire rod and rebar may fall first and then stabilize in June, and tend to weaken and fluctuate.

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