Price trend

According to the price monitoring of SunSirs, the prices of rebar and wire rod in Jiangsu, Zhejiang, and Shanghai regions fluctuated narrowly last week. As of the 4th, the average price of HRB400 rebar in Jiangsu, Zhejiang, and Shanghai regions was about 3,113 RMB/ton, with a weekly increase of 1.33%; The average price of HPB300 high-speed rail was 3,312.5 RMB/ton, with a weekly increase of 1.84%.

Analysis review

Market: At the beginning of last week, the overall demand for steel weakened due to weather conditions, coupled with a downward trend in the raw material market and insufficient support for finished product prices, resulting in a downward shift in steel prices. Subsequently, influenced by the "anti involution" policy and the macro impact on the raw material side, the support from the raw material side shifted upward, and the market's willingness to pull up prices was high. Various markets raised prices one after another, but overall market demand declined, and the accumulation of steel stocks in the market limited the upward range. Therefore, the price of rebar and wire rod first fell and then rose last week, with a stronger and volatile operation.

Supply side: Last week's building materials production was 3.0655 million tons, with a month on month increase of 0.86% and an increase in production. In terms of rebar, the production of rebar increased by 32,400 tons. From a regional perspective, the increment in East China and Northwest China was higher. Looking at each province, Xinjiang, Hunan, Jiangsu, and Jiangxi saw significant increases in production, mainly due to the resumption of rolling mills and production efficiency improvements in some steel mills, resulting in an increase in rebar production; Shanxi's production had slightly decreased due to maintenance of individual steel mills and transfer of molten iron; On the supply side, the production of wire rod last week had shifted from an increase to a decrease, with a total decrease of 6,200 tons. From a regional perspective, the reduction was mainly concentrated in the North China region, with a decrease of 9,700 tons in supply. At the same time, there was a slight increase in the Northeast region, with an increase of 8,700 tons in supply. Production in other regions had also decreased to varying degrees; Looking at each province, Jilin Province had shown a significant increase, with a weekly production increase of 8,000 tons, while other regions had mainly experienced slight fluctuations in production. As of July 4th, there were still sufficient orders for steel mills to deliver steel billets, so it is expected that the short-term production of steel mills will continue to increase, but the height will be limited.

In terms of inventory: Last week, the national building materials inventory was 4.1903 million tons, an increase of 0.8% compared to the last week’s previous week. Last week, the factory inventory showed a downward trend, with a month on month decrease of 51,300 tons. Among them, inventory reduction in South China and Northwest China was at the forefront, while inventory in Southwest China continued to rise. By province, Guangdong and Xinjiang experienced the highest inventory decline; In terms of wire rod and steel mill inventory, there was a slight decrease in factory inventory this week, with a total reduction of 10,000 tons. From a regional perspective, the inventory decline in East China and Northwest China was higher, with a decrease of 8,000 tons and 6,200 tons respectively, while steel mills in other regions had experienced slight fluctuations in inventory to varying degrees; Looking at provinces, Shaanxi's inventory decline ranks among the top, with a weekly decrease of 5,000 tons. In terms of social inventory, the southern region accumulated 25,200 tons of inventory last week, while the eastern and northern regions respectively depleted 11,300 tons and 500 tons; From the perspective of the seven major regions, the East China, Northwest, and Northeast regions experienced destocking, while the rest of the regions showed a trend of accumulating destocking. The social inventory was still relatively low, and with the improvement of weather in the south, it is expected that inventory may continue to decline next week.

On the demand side, the average weekly trading volume in China last week was 106,800 tons, with a slight increase compared to the previous week. The trading situation has improved, and the trading volume had exceeded 100,000 tons. However, although downstream terminal demand was still being released, there was a weak trend, mainly due to the gradually warming weather and limited downstream terminal production, which was not conducive to the release of steel demand.

Market outlook

In summary, analysts from SunSirs believe that the season of gradually rising temperatures has led to a sustained weakening of terminal demand; On the other hand, in terms of steel mills, after the improvement of production profits and the recovery of production willingness, the supply and demand of thread snails may shift towards a trend of increasing supply and decreasing demand, and the process of destocking of social inventory is limited. As of July 4th, market sentiment was more dominant in price trends, and it is expected that prices will rise first and then fall next week, with a narrow range of fluctuations.

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