Price trend

According to data from SunSirs, rebar and wire rod prices rose initially and then fell in February. By the end of the month, the average price of HRB400 rebar in the Jiangsu, Zhejiang, and Shanghai regions was 3,141.66 RMB/ton, a decrease of 1.83% from the beginning of the month; the average price of HPB300 high-strength wire rod was 3,332.5 RMB/ton, a decrease of 2.27% from the beginning of the month.

Influencing factors

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

Supply Side:

February saw a phased decline in rebar supply, accompanied by a rapid accumulation of inventory. Affected by the Spring Festival holiday and some steel mills' proactive production controls, rebar production saw a significant decrease. Data shows that rebar production in mid-February fell to a low of around 1.6916 million tons, with the overall monthly production level lower than in January. However, as post-holiday demand had not yet picked up, the rapid increase in inventory became the main source of pressure on the market this month. As of late February, the total social inventory of the five major steel products reached 12.9575 million tons, an increase of 4.0502 million tons compared to the previous month. Among them, rebar social inventory reached 5.6776 million tons, becoming the product with the largest increase in inventory. Data from the China Iron and Steel Association shows that in mid-February, steel social inventory increased by 22.0% month-on-month, with rebar being the product with the largest increase in inventory.

Demand Side:

Weak demand was the core issue in the market this month. Affected by the Spring Festival holiday and the post-Lantern Festival return-to-work schedule, the resumption of work at downstream construction sites was slow. As of late February, the national construction site resumption rate was only 8.9%, slightly better than the same period last year, but still at a historically low level. The average daily transaction volume of building materials was only about 34,900 tons, and the market trading atmosphere was sluggish. Looking at apparent consumption, in mid-February, apparent consumption of rebar fell to 1.0191 million tons, a significant decrease compared to the previous month, indicating weak end-user demand.

March Market Forecast:

Policy-wise: The upcoming national conference in early March will be a key focus for the market. The meeting at the end of February clearly stated the continuation of a more proactive fiscal policy and a moderately loose monetary policy, setting the tone for economic growth throughout the year. As a leading indicator, local government bond issuance this year has already exceeded 2 trillion RMB, and the implementation of proactive fiscal policy is expected to provide financial support for infrastructure investment. The improved macroeconomic policy environment will strongly support market confidence. It is anticipated that the market will engage in speculation surrounding policy expectations in mid-March, and a potential price rebound is possible.

On the demand side: With temperatures rising after the Lantern Festival, the pace of resumption of work at downstream construction sites is expected to accelerate. A survey by Centennial Construction shows that as of late February, the funding rate for construction sites was 29%, an increase of 9.4 percentage points year-on-year, providing financial security for subsequent resumption of work. It is expected that from early March, apparent consumption of rebar will gradually recover, and the average daily transaction volume of building materials is expected to return to the normal level of 100,000-150,000 tons. The strength and sustainability of the demand recovery will directly determine the height of this rebound. If end-user demand recovers better than expected, prices are expected to break through the 3,300 RMB/ton mark; if the recovery is slow, the rebound space will be limited.

On the supply side: Steel mills are expected to be cautious in resuming production due to thin profit margins and anticipated environmental production restrictions during the important March meetings. Data shows that current steel mill profitability is only 38.53%, and the rebar operating rate is relatively low at 32.78%. In early March, northern regions may implement phased environmental production restrictions, putting downward pressure on blast furnace operating rates and further restricting supply release. This supply-side contraction is expected to alleviate high inventory pressure and create conditions for price stabilization. Furthermore, major steel mills such as Ansteel and Benxi Steel have announced a 100 RMB/ton increase in rebar ex-factory prices for March, indicating a strong willingness to maintain prices.

Market Outlook

In summary, rebar prices in March are expected to show a trend of "initial decline followed by a rise, with a slightly stronger overall trend." Early March: The market will still face the pressure of high inventory and the initial challenges of demand recovery. Prices may continue to fluctuate weakly, but the downside is limited, and policy expectations will provide bottom support. Mid-to-late March: With downstream industries fully resuming operations and inventory entering a depletion phase, coupled with the gradual implementation of favorable policies, the market is expected to see a phased rebound.

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