Price trend

According to price monitoring by SunSirs, in January, rebar and wire rod prices experienced a slight downward trend. As of January 30th, the average price of HRB400 rebar in Hangzhou was 3,200.34 RMB/ton, a decrease of 0.93% compared to the beginning of the month; the average price of HPB300 high-strength wire rod in the Jiangsu, Zhejiang, and Shanghai region was 3,410 RMB/ton, a decrease of 2.57% compared to the beginning of the month.

Factors affecting prices

According to data from SunSirs, both the weekly production and total inventory of rebar and wire rod decreased in January.

Regarding inventory, as of January 29th, weekly rebar production increased by 0.28 million tons to 1.9983 million tons compared to the previous week, and increased by 0.1161 million tons compared to the previous month. Social inventory increased by 0.2328 million tons to 3.264 million tons compared to the previous week, and increased by 0.4374 million tons compared to the previous month. Factory inventory increased by 0.0015 million tons to 1.4913 million tons compared to the previous week, and increased by 0.1036 million tons compared to the previous month.

On the supply side, building materials production in this cycle reached 2.7624 million tons, an increase of 15,600 tons compared to the previous period, indicating continued growth. Rebar production in January showed a trend of initial stability followed by an increase. Steel supply rebounded significantly, primarily driven by a substantial increase in rebar production. National rebar production reached 1.9955 million tons, a significant increase of 92,500 tons compared to the previous period, 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 growth. The market should pay attention to the match between the speed of production recovery and the resilience of demand in the future.

From a market perspective, the construction steel market was exhibiting typical characteristics of a low-demand season. Rebar futures prices were fluctuating downwards, suppressing market sentiment. Although spot prices in many regions were attempting to stabilize, the impact of rainy weather and the approaching Chinese New Year holiday meant that end-users were only making limited purchases to meet immediate needs, and actual transactions generally reied on small price concessions. As some construction sites gradually ceased operations and traders left the market early, the market trading atmosphere was becoming increasingly quiet, and was gradually entering a state of having prices but no transactions. It is expected that spot prices before the holiday will maintain a narrow range of fluctuations, with limited volatility. The core issue will shift to the inventory levels and the pace of demand recovery after the holiday.

In terms of demand: Last week, the national average weekly transaction volume was 67,380 tons, a decrease of 10,400 tons compared to the previous week. The transaction volume for building materials in January gradually decreased, falling below 70,000 tons, further indicating a gradual reduction in downstream end-user demand.

Market outlook

In summary, national construction steel prices are expected to consolidate in February, with limited room for both increases and decreases. The main logic behind this is that the market has entered a pre-holiday mode characterized by weak supply and demand. On the one hand, steel mill production has increased slightly, and while social inventories are accumulating, the rate is still healthy, indicating that overall supply pressure is not exceeding expectations. On the other hand, with most steel mills implementing their winter stocking policies and some businesses closing for the holidays early, actual market demand is weakening. Market sentiment remains relatively stable due to the support of low prices before the holiday, but the lack of prominent factors driving unilateral price changes suggests that sideways consolidation will be the main trend.

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