Price trend

According to SunSirs' price monitoring, wire rod and rebar prices initially rose before falling in July, fluctuating within a narrow range. As of July 31, the average price of HRB400 rebar in the Jiangsu, Zhejiang, and Shanghai regions was 3,349 RMB/ton, up 9.12% from the beginning of the month; the average price of HPB300 high-strength wire rod was 3,590 RMB/ton, up 10.38% from the beginning of the month.

Factors affecting price

In July, the weekly production and total inventory of wire rod and rebar both decreased.

Supply side

As of July 31, weekly rebar production decreased by 9,000 tons month-over-month to 2.1106 million tons, a monthly decrease of 100,200 tons. Social inventory increased by 111,700 tons month-over-month to 3.8414 million tons, a monthly increase of 194,000 tons. Factory inventory decreased by 35,200 tons month-over-month to 1.6215 million tons, a monthly decrease of 187,300 tons.

Last week, building materials production reached 3.0393 million tons, a 3.79% decrease from the previous month. This represents a decrease in production. Rebar production decreased by 9,000 tons. Regionally, increases were primarily concentrated in North China and Northwest China, while Southwest China and South-Central regions saw the largest decreases. Hebei, Xinjiang, Anhui, and Fujian provinces saw the largest increases, primarily due to the resumption of production at some steel mills and increased rebar production. Rebar production declined slightly in Hubei, Sichuan, Jiangsu, and Jiangxi due to temporary maintenance at individual steel mills and adjustments to production between different product types. Regarding wire rod coil supply, wire rod coil production shifted from growth to decline this week, with a total decrease of 11,100 tons. Regionally, the decrease was primarily concentrated in North China, where supply decreased by 11,100 tons. Meanwhile, Central China saw a slight increase of 7,900 tons. Production in other regions generally saw small adjustments. Provincially, Shanxi Province saw a significant weekly decrease of 9,100 tons, while production in other regions saw minor fluctuations.

Market

In July, downstream construction site operations were significantly impacted by weather, resulting in a decrease in overall steel demand and seasonal fluctuations in fundamental data. However, market sentiment was buoyed by news of "anti-involution" measures, leading to an increase in speculative trading. Trading was primarily based on quick in-and-out strategies, with merchants maintaining low inventories and showing a strong willingness to support prices and raise prices.

On the demand side:

Last week, the national average weekly transaction volume was 114,720 tons, a slight increase from the previous week. The transaction situation improved, and the transaction volume had exceeded 110,000 tons, mainly speculative transactions. Although downstream terminal demand was still being released, it had shown a weak trend. This was mainly because the weather had entered the rainy season in July, and the release of terminal demand had weakened.

Future outlook:

In terms of demand, the market in August is still in the traditional off-season, the start-up of downstream terminals is limited, and procurement operations are mostly small and concentrated. In addition, the steel mills themselves have acceptable profits and maintain the current production scale, and supply may increase. Affected by the weather, the release of demand from downstream construction sites has slowed down, and inventories have maintained a downward trend. The market sentiment is relatively active, and merchants are willing to maintain prices, but the release of demand in August is limited.

In summary, given the assumption of limited terminal operations in August, the building materials industry may see a shift towards a fundamental situation of increased supply and reduced demand. However, market speculation remains active, with merchants maintaining price support. The struggle between strong expectations and weak realities will intensify, and it’s expected that wire rod and rebar prices may rise first, then fall in August, with a volatility trend of stronger.

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