Price trend

According to SunSirs price monitoring, rebar and wire rod prices in Jiangsu, Zhejiang, and Shanghai fluctuated within a narrow range last week. As of the 22nd, the average price of HRB400 rebar in these regions was approximately 3,242 RMB/ton, a 0.92% decrease from the previous week. The average price of HPB300 high-strength wire rod was 3,382.5 RMB/ton, a 0.81% decrease from the previous week.

Analysis review

Market: Coking coal prices continued to rise last week, boosting market sentiment. Support from raw materials remained, and steel mills were willing to maintain prices. However, overall demand from the end market remained weak. As market sentiment cooled, steel prices fell again. As a result, wire rod and rebar prices fluctuated narrowly last week, trending downward.

On the supply side, last week's building materials output reached 2.9961 million tons, a decrease of 37,100 tons from the previous month, continuing its downward trend. Rebar production decreased by 58,000 tons. Regionally, Northwest China, East China, Northeast China, and South-Central China saw the largest decreases, while South China and North China saw slight increases. Provincially, Xinjiang, Heilongjiang, and Hunan saw significant decreases due to short-term maintenance at individual steel mills, which shifted hot metal to other grades. Guangdong saw a slight increase in output due to the resumption of production at some mills and adjustments to rebar production. Wire rod production saw a slight increase of 20,900 tons last week. Regionally, this increase was primarily concentrated in East China, where supply increased by 19,000 tons, while North China saw an increase of 7,700 tons. Production in other regions generally saw slight adjustments. Provincially, Zhejiang Province saw a significant increase, with weekly output increasing by 15,000 tons. Production in other regions saw minor fluctuations.

Inventory: Last week, national building materials inventories reached 5 million tons, a week-on-week increase of 198,200 tons. Factory inventories showed an upward trend, increasing by 22,700 tons month-on-month. Regionally, inventory increases were primarily concentrated in Central and South China, South China, and Southwest China. By province, Sichuan, Guangdong, and Hubei saw the largest increases. Regarding wire rod coils, factory inventories decreased slightly last week, totaling 7,400 tons. From a regional perspective, North China saw the largest inventory decline, with a decrease of 27,000 tons, while inventories of steel mills in other regions fluctuated slightly to varying degrees; from a provincial perspective, Shanxi saw the largest inventory decline, with a weekly decrease of 27,000 tons; in terms of building materials, taking rebar as an example, from the perspective of the seven major regions, except for the Northwest and Northeast regions, which saw a destocking of 3,100 and 9,000 tons respectively last week, the rest of the regions showed an accumulation of inventory, among which East China had the largest accumulation of inventory, with a weekly accumulation of 95,800 tons; in terms of hot rolled coils, from the perspective of the seven major regions, except for East China, South China and Northeast China, which saw a weekly accumulation of 28,400 tons, 30,000 tons and 9,100 tons respectively, other regions showed a destocking state, among which Central China had the largest destocking, with a weekly destocking of 9,000 tons.

On the demand side, the national average weekly trading volume last week was 94,820 tons, a decrease of 7,460 tons from the previous week. Trading activity declined, with trading volume falling to just over 90,000 tons. Downstream terminal demand continued to decline, with trading volume declining after sentiment returned to rationality. This was mainly due to the gradually warming weather, which had limited downstream terminal operations, hindering the release of steel demand.

Future outlook:

To sum up, analysts from SunSirs believe that under the high temperature weather, the release of terminal demand was weak; as for steel mills, production profits recovered after the increase in raw material prices, and the steel mills were willing to maintain prices. The supply and demand of wire rod and rebar may maintain a weak supply and demand trend, and inventories may be reduced next week. At this stage, the price trend of wire rod and rebar is mainly affected by market sentiment. It is expected that prices may rise first and then fall next week, and fluctuate in a narrow range.

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