Recently, driven by heightened policy expectations and dynamic adjustments on both the supply and demand sides of fundamentals, rebar prices have exhibited a fluctuating yet generally firm trend. On the macro front, December marks a policy window period for the market. Fundamentally, voluntary production cuts by steel mills have resonated with seasonal rush-demand, accelerating inventory drawdowns and providing robust support for prices.

Since entering the off-season, construction material demand has not been particularly weak, with apparent rebar demand slightly exceeding expectations. As blast furnace output continues to decline, supply pressure has eased significantly, inventory drawdowns have proceeded smoothly, and spot prices have remained relatively firm. Supported by expectations of favorable macro policies, futures prices for steel products have rebounded. However, due to sustained blast furnace output cuts, pig iron production has gradually declined, placing significant pressure on upstream furnace material demand. Within this negative feedback loop, prices for related products have generally retreated. With increased imports of Mongolian coal, the supply-demand dynamics for coking coal have gradually weakened, leading to a sharp decline in coking coal prices from their highs. Although tonnage steel profits have marginally improved, the downward shift in the cost center—against a backdrop of cost-driven pricing—continues to exert significant pressure on steel prices, causing them to fall rapidly after a brief rebound.

Data indicates China's average daily crude steel output in October reached 2.323 million tons, a 5.2% month-on-month decline, hitting its lowest level since December 2023 (2.175 million tons). Since November, steel mills' profitability rates have continuously declined, with mounting loss pressures driving adjustments to production schedules. Both blast furnace operation rates and capacity utilization rates have shown downward trends. During the first week of December, weekly rebar output dropped to 1.8931 million tons, an 8.14% month-on-month decline. The contraction in rebar supply significantly outpaced other steel products, revealing pronounced structural production cuts.

Current demand exhibits a north-south divergence. Construction activity in northern regions has nearly stalled due to cold weather, while southern demand demonstrates unexpected resilience as existing projects rush to meet deadlines. Apparent demand for rebar in the first week of December reached 2.1698 million tons, down 4.81% week-on-week but less than seasonal expectations. Notably, manufacturing steel demand continues to improve, with robust supply and demand in the automotive market and favorable industry development trends partially offsetting downward pressure from real estate. However, the home appliance market remains in a period of destocking and structural adjustment, providing insufficient support for demand.

As temperatures drop and winter sets in across most of the country, construction material demand has entered its traditional off-season, leading to a gradual month-on-month decline in apparent rebar demand. However, recent weeks have shown rebar demand slightly outperforming expectations. Following a lackluster peak season, the market has exhibited some signs of an unusually strong off-season, though the sustainability of this trend remains to be seen. With production declining significantly, rebar inventories continue to fall, maintaining a healthy destocking trend. Regarding hot-rolled coil, demand remains resilient, supported by manufacturing and exports. With construction material output remaining low, molten iron continues to flow primarily toward plate production. This has resulted in relatively high hot-rolled coil output and inventory levels, leading to slow inventory drawdowns and persistent pressure that requires further relief.

In the first week of December, total rebar inventory stood at 5.0381 million tons, down 276,700 tons week-on-week. This marks the eighth consecutive week of inventory drawdown, with the pace of reduction slightly accelerating compared to earlier periods. Both social and factory inventories declined, reflecting the effectiveness of steel mills' proactive production controls and increased willingness among traders to reduce stockpiles.

Recently, tighter environmental restrictions during the heating season and low steel mill profits have constrained rebar supply. Simultaneously, seasonal construction demand and infrastructure projects have supported demand resilience, jointly driving a healthy inventory drawdown trend. Current inventory levels have significantly declined from their annual peak.

Looking ahead, terminal demand for rebar remains weak. As pig iron output declines, supply pressure is gradually easing, and overall market supply-demand imbalances are manageable. Steel prices currently remain at relatively low levels compared to recent years. Supported by efforts to “counter internal competition” and potential macroeconomic policy benefits, downside potential is limited. However, demand recovery will take considerable time, and the slow pace of clearing excess supply capacity significantly constrains the upside for steel prices. The market is likely to continue consolidating at lower levels, with near-term price movements testing the strength of cost-side support. Key focus areas going forward include the implementation of domestic demand policies, progress in tariff negotiations, and whether supply-side production restrictions will be intensified.

Rebar prices are expected to remain caught between strong expectations and weak reality. On the policy front, key meetings in December may signal growth stabilization efforts, with fiscal and real estate policies potentially boosting market confidence. Fundamentally, supply contraction and low inventories provide a safety margin for prices, but the real estate market remains in an adjustment and bottoming phase, with lingering concerns on the demand side. Steel prices will likely remain under pressure in December, potentially shifting downward, though winter stockpiling may support the price floor, with range-bound fluctuations being the most probable outcome.

Key focus areas include the intensity of steel mill supply cuts, the scale of winter stockpiling, and marginal changes in real estate policies.

As an integrated internet platform providing benchmark prices, on December 10, the benchmark price of rebar on SunSirs was 3199.66 RMB/ton, an increase of 0.68% compared with the beginning of the month (3178.16 RMB/ton).

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