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 26th, the average price of HRB400 rebar in these regions was approximately 3,144.66 RMB/ton, up 0.58% week-on-week; the average price of HPB300 high-strength wire rod was 3,310 RMB/ton, up 0.46% week-on-week.

Analysis review 

Market: Last week, the construction steel market fluctuated amidst a volatile market environment, oscillating between weak realities and strong expectations. While fundamental demand fell short of expectations, positive macroeconomic news and raw material costs bolstered market sentiment, leading to generally firm national prices. Regional divergence was evident: Southwest China saw a 20 RMB/ton drop, while Central and Southern China saw increases of 10-30 RMB/ton. Looking ahead to next week, it is expected that supply pressure will be slightly relieved, the macro environment will improve (risk aversion will decline, international relations will ease), and coupled with the expectation of a rebound in demand, the national construction steel prices may show a trend of fluctuating and strong operation.

On the supply side: Last week, building materials production reached 2.9539 million tons, a month-on-month increase of 95,600 tons, reflecting some growth. Rebar and wire rod production both rebounded last week. Rebar production nationwide increased by 59,100 tons, with widespread increases, particularly in provinces like Jiangsu and Hebei, primarily due to steel mill resumptions and hot metal adjustments. Only small production decreases were seen in parts of Southwest and North China. Wire rod production also increased by 36,600 tons, with the increase primarily concentrated in East China (particularly Jiangsu) and Northeast China. Overall supply was showing a slight expansion.

Inventory: Last week, national building materials inventories reached 5.1134 million tons, a week-on-week decrease of 207,300 tons. Steel factory inventories showed a differentiated pattern last week. Rebar factory inventories remained generally flat, with significant regional divergence: East China saw the largest decrease (-86,700 tons), while Central China and Northwest China saw slight increases. Wire rod factory inventories saw a slight increase, with increases seen across all regions except North China, with Sichuan showing a significant increase. Hot rolled coil factory inventories declined slightly, with the main destocking occurring in East and North China. Overall, rebar inventories were depleted, particularly in East China, but some regions still faced pressure.

Demand side: Last week, the national average weekly trading volume was 100,600 tons, a week-on-week increase of 2,840 tons. Trading conditions continued to recover, with trading volumes exceeding 100,000 tons. The release of downstream terminal demand remained resilient. As downstream terminal operations continued to resume, it was beneficial to the release of steel demand.

Market outlook

In summary, SunSirs’ analysts believe that, considering supply, demand, and macroeconomic factors, domestic construction steel prices are expected to fluctuate slightly higher next week. Supporting factors are three main factors: first, an improving macroeconomic environment and a rebound in market risk appetite; second, expected easing of supply-side pressures; and third, continued expectations of a rebound in demand. However, as of October 26, the "weak reality" fundamentals had yet to fundamentally reverse, which will limit price upside and lead to volatility.

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