Price trend

According to price monitoring by SunSirs, rebar and wire rod prices in the Jiangsu, Zhejiang, and Shanghai regions fluctuated within a narrow range last week. As of the 10th, the average price of HRB400 rebar in the Jiangsu, Zhejiang, and Shanghai regions was approximately 3,235.66 RMB/ton, a week-on-week increase of 0.16%; the average price of HPB300 wire rod was 3,490 RMB/ton, a week-on-week decrease of 0.29%.

Market Analysis

Market: Last week, due to weak end-user demand and low willingness of market participants to stock up, there was insufficient upward momentum in prices. The fundamental imbalance of strong supply and weak demand remained prominent, and market inventory was being digested slowly. It is expected that prices will return to fundamental pricing logic in the short term, showing a pattern of narrow fluctuations under pressure.

Supply side: Last week, building materials production totaled 2.6395 million tons, a decrease of 0.37 million tons compared to the previous week, indicating a halt in production growth and a subsequent decline. Rebar production increased while wire rod production decreased. Last week, steel production showed a mixed trend: rebar production increased by 28,200 tons due to the resumption of production at some steel mills in East and Southwest China, with significant increases in Anhui and Hubei provinces, but slight decreases in Shanxi and Liaoning due to maintenance. Wire rod production decreased by 31,900 tons, mainly affected by the North and East China regions, with a particularly significant decrease in Shanxi. Although some steel mills underwent maintenance, the recovery of other production capacities limited the overall change in supply, resulting in a regional pattern of both increased and decreased production.

In terms of inventory: Last week, national building materials inventory reached 5.2792 million tons, a week-on-week increase of 227,300 tons. Last week, the total inventory of construction steel increased. Total rebar inventory increased by 85,600 tons, with significant inventory accumulation in East China, Southwest China, and Jiangsu and Sichuan provinces due to increased production, reflecting insufficient demand. Wire rod inventory also increased slightly by 35,700 tons. Overall, the inventory pressure on construction steel was rising, while the fundamentals of sheet metal remained relatively healthy, highlighting the structural contradictions in the market.

Demand side: Last week, the national average weekly transaction volume was 95,460 tons, a week-on-week increase of 460 tons. Building materials transaction volume increased slightly, gradually approaching 100,000 tons, indicating that downstream end-user demand remains resilient.  However, this week's consumption of the five major product categories was 7.9862 million tons, a decrease of 5%; among them, building materials consumption decreased by 13.5% week-on-week.

Market Outlook:

In summary, analysts at SunSirs believe that the construction steel market is expected to show a volatile and slightly weaker trend next week. This is mainly due to steel mills' strong intention to maintain prices, but production continues to increase, while end-users' purchasing enthusiasm is insufficient, resulting in weak market transactions. As winter stockpiling approaches, the fundamental contradiction of strong supply and weak demand is gradually becoming more prominent, with both speculative demand and actual purchases declining simultaneously. Inventory pressure may further increase, leading to greater downward pressure on prices.

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