Price trend

According to data from SunSirs, rebar and wire rod prices in the Jiangsu, Zhejiang, and Shanghai regions fluctuated narrowly last week. As of the 30th, the average price of HRB400 rebar in the region was approximately 3,200 RMB/ton, up 1.74% week-on-week; the average price of HPB300 high-strength wire rod was 3,365 RMB/ton, up 1.63% week-on-week.

Analysis review

Market Overview: Rebar prices recently surged, primarily driven by supply contraction: environmental protection-related production restrictions in many regions and voluntary production cuts by steel mills had tightened supply at the source. Simultaneously, the continued rise in raw material costs such as coking coal and scrap steel created a solid price floor. Despite weak actual demand, market optimism regarding the macroeconomic outlook had effectively boosted confidence, jointly driving the strength of both the futures and spot markets.

On the supply side: Last week, construction material output reached 3.024 million tons, an increase of 70,100 tons compared to the previous week, indicating some growth. Both rebar and wire rod output rebounded last week. National rebar output increased by 55,200 tons, with widespread increases, particularly in Jiangsu and Hebei provinces, mainly due to steel mill resumption of production and pig iron allocation; only some areas in Southwest and North China saw slight production reductions. Wire rod output also increased by 14,900 tons, with the increase mainly concentrated in East China (especially Jiangsu) and Northeast China. Overall, supply showed a slight expansion trend.

Regarding inventory: Last week, the national construction material inventory was 5.0038 million tons, a decrease of 109,600 tons week-on-week. Steel mill inventories showed a destocking trend last week. Rebar mill inventories decreased by 66,700 tons, with significant regional differentiation: East China saw the largest destocking (-86,700 tons), while Central China and Northwest China saw slight increases. Wire rod mill inventories decreased by 42,900 tons. Overall, rebar social inventory reduction was good, especially in East China, but some regions still faced pressure.

On the demand side: The national average weekly transaction volume two weeks ago was 100,600 tons, an increase of 2,840 tons week-on-week. As of October 30, the transaction volume of building materials was higher than the previous week, and the transaction situation continued to recover, remaining above 100,000 tons, indicating that downstream end-user demand still had some resilience. As downstream end-user operations continued, it is beneficial to the release of steel demand.

Market outlook

In summary, analysts at SunSirs believe that, overall, rebar prices are more likely to rise than fall in the short term, with a slight upward shift in the center, but the upside potential is limited. On the one hand, continued environmental protection-related production restrictions, solid cost support, and optimistic macroeconomic sentiment had jointly formed a solid bottom and provided upward momentum. On the other hand, downstream demand had not fundamentally improved, acceptance of high-priced resources was low, and social inventory remained high. These factors will severely restrict the continued rise in prices, creating a game between "strong expectations" and "high inventory and weak reality." Considering both supply and demand and macroeconomic factors, domestic construction steel prices are expected to fluctuate with a slightly upward bias next week.

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