Price trend

According to price monitoring by SunSirs, steel rebar and wire rod prices in the Jiangsu, Zhejiang, and Shanghai regions fluctuated within a narrow range last week. As of the 30th, the average price of HRB400 rebar in the Jiangsu, Zhejiang, and Shanghai regions was approximately 3,200.34 RMB/ton, a decrease of 0.21% compared to the previous week; the average price of HPB300 wire rod was 3,410 RMB/ton, a decrease of 0.15% compared to the previous week.

Market analysis

Market Overview: Last week, the construction steel market exhibited typical characteristics of a low-demand season. Futures rebar prices fluctuated downwards, suppressing market sentiment. Although spot prices in many regions attempted to remain stable, affected by rainy weather and the approaching Chinese New Year, end-users only maintained minimal essential purchases, and actual transactions generally relied on small price concessions. As some construction sites gradually suspended operations and traders left the market early, the market trading atmosphere became increasingly quiet, gradually entering a state of having prices but no transactions. It is expected that spot prices will maintain a narrow range of fluctuations before the holiday, with limited volatility. The core issue will shift to the inventory and demand recovery pace after the holiday.

Supply Side: Last week, building materials production reached 2.7624 million tons, a week-on-week increase of 15,600 tons, representing a slight increase in production. Steel supply rebounded significantly last week, primarily driven by a substantial increase in rebar production. National rebar production reached 1.9955 million tons, a significant increase of 92,500 tons week-on-week, mainly led by the Central China region, with Hubei and Jiangsu provinces contributing the main increase due to the resumption of production lines. Meanwhile, wire rod production only increased slightly by 16,400 tons, a relatively moderate change. Overall, the supply side has ended its previous contraction and is showing a shift from decline to increase. The market needs to pay attention to the matching degree between the speed of production recovery and the resilience of demand in the future.

Inventory side: Last week, national building materials inventory reached 5.6995 million tons, a week-on-week increase of 252,500 tons. Last week, the steel inventory structure showed divergence, with the increase in supply beginning to be reflected in factory inventories. Rebar factory inventories stopped declining and began to accumulate, increasing by 63,200 tons week-on-week. This accumulation was mainly concentrated in North China and Central China, indicating that after the increase in production, steel mills' shipping speed slowed down, and pressure began to emerge. In contrast, wire rod factory inventories increased less significantly. Overall, North China became the core area of inventory accumulation, which corresponds to the increase in production in that region. Hot rolled coil inventory performed slightly better, with inventory reduction still occurring in North China and Central China. Overall, with the continued recovery of supply, the inventory turning point has initially appeared, and it is necessary to be vigilant about the pressure that subsequent accelerated inventory accumulation will exert on market sentiment and prices.

Demand side: The national average weekly transaction volume two weeks ago was 67,380 tons, a decrease of 10,400 tons compared to the previous week. The transaction volume of building materials was gradually decreasing, falling below 70,000 tons, further indicating a gradual reduction in downstream end-user demand.

Market outlook

In summary, SunSirs analysts believe that the market's winter stocking policies will gradually come to an end next week. Fundamentals remain stable, with a weak supply-demand balance and healthy inventory levels providing support for prices. However, as steel mills' winter stocking policies conclude, market sentiment and speculative demand will also stabilize, potentially leading to reduced short-term volatility. Against the backdrop of seasonally weaker end-user demand, prices will seek a new equilibrium between policy dynamics and fundamental factors. Therefore, nationwide construction steel prices are expected to fluctuate and adjust accordingly.

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