Price trend

According to SunSirs price monitoring, rebar and wire rod prices in the Jiangsu, Zhejiang, and Shanghai regions fluctuated within a narrow range last week. As of the 19th, the average price of HRB400 rebar in these regions was approximately 3,150 RMB/ton, up 0.83% week-on-week; the average price of HPB300 high-strength wire rod was 3,350 RMB/ton, up 1.82% week-on-week.

Analysis review

Market: At the beginning of last week, favorable overseas macroeconomic conditions were realized, coupled with the destocking of social inventories of steel mills, market sentiment improved, and steel mills had a strong willingness to maintain prices after the increase in production costs, so the price of wire rod and rebar rose slightly and tended to be stronger.

On the supply side, last week's building materials output reached 2.9169 million tons, a decrease of 51,400 tons from the previous month, with output continuing to decline. Rebar production continued to decline, falling by 54,800 tons last week. Regionally, production increased in Central China, South China, and Southwest China, while decreased in the rest of the country. Provincially, Shanxi, Jiangsu, Xinjiang, Heilongjiang, and Anhui saw the largest decreases. This reduction was attributed to maintenance shutdowns at steel mills in some regions, with hot metal being diverted to other products such as hot rolled coils. Rolling mills in Henan and Guangdong resumed operations last week, leading to an overall increase in output. Wire rod coil production saw a turnaround from a decline to an increase last week, with a combined increase of 3,400 tons. Regionally, this increase was primarily concentrated in Northeast China and North China, with supply increases of 12,400 and 8,200 tons, respectively. Meanwhile, supply decreased in East China by 16,100 tons, while production in other regions generally saw small adjustments. Provincially, Jilin Province saw a significant increase, with weekly output increasing by 10,000 tons. Output in other regions saw minor fluctuations.

Inventory: National building materials inventories reached 5.6046 million tons last week, up 9,200 tons from the previous week. Factory inventories decreased slightly last week, down 37,000 tons from the previous week. Regionally, production increased in Central China, South China, and Southwest China, while decreased in the rest of the country. Shanxi, Jiangsu, Xinjiang, Heilongjiang, and Anhui provinces saw the largest decreases. This reduction was attributed to maintenance shutdowns at some steel mills, which shifted hot metal to other products like hot rolled coils. Rolling mills in Henan and Guangdong resumed operations the previous week, leading to an overall increase in production. Wire rod coil production saw a turnaround from a decline to an increase last week, totaling 3,400 tons. Regionally, this increase was primarily concentrated in Northeast China and North China, with supply increasing by 12,400 and 8,200 tons, respectively. Meanwhile, supply decreased by 16,100 tons in East China, while production in other regions generally saw small adjustments. Jilin Province saw a significant increase, with weekly output increasing by 10,000 tons, while production in other regions saw minor fluctuations.

On the demand side, the national average weekly trading volume last week was 106,500 tons, a week-on-week increase of 3,420 tons. Trading activity continued to recover, with trading volume remaining above 100,000 tons. Downstream terminal demand remained resilient. As downstream terminal operations gradually recover, this will positively impact steel demand. With the National Day holiday approaching next week, pre-holiday restocking demand is expected to increase.

Market outlook

To sum up, analysts from SunSirs believe that with the National Day holiday approaching, terminal demand will be released in a concentrated manner next week; as for steel mills, the strong price support on the raw material side has led to a strong willingness of steel mills to maintain prices. The supply and demand of wire rod and rebar may maintain a trend of decreasing supply and increasing demand. There is still a possibility of destocking next week. Affected by the pre-holiday replenishment, the market may have centralized purchasing operations, which is good for wire rod and rebar prices. It is expected that prices may fluctuate upward and tend to strengthen next week.

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