Price trend

According to data from SunSirs, rebar and wire rod prices in the Jiangsu, Zhejiang, and Shanghai regions fluctuated narrowly last week. As of the 6th, the average price of HRB400 rebar in the Jiangsu, Zhejiang, and Shanghai regions was approximately 3,156.34 RMB/ton, up 0.66% week-on-week; the average price of HPB300 high-strength wire rod was 3,327.5 RMB/ton, down 0.15% week-on-week.

Market analysis

Market Overview: The rebar market exhibited narrow-range fluctuations with a slight decline in average prices. The market was temporarily in a phase of interplay between "strong expectations" and "weak reality." On the one hand, expectations for macroeconomic policies were boosting market confidence; on the other hand, high inventory levels and slow demand recovery were suppressing upward price potential.

Supply side: Rebar supply showed a significant rebound last week. Data showed that rebar production reached 1.7331 million tons last week, an increase of 82,100 tons, or 4.97%, compared to the previous week. Capacity utilization was 37.99%, an increase of 1.80 percentage points week-on-week. The increase in production was mainly concentrated in East China, Southwest China, and South China, with Sichuan, Jiangsu, and Guangdong showing the largest increases. The core reason was the concentrated resumption of production lines after the holiday. Regarding short-process steel production, the pace of electric arc furnace (EAF) resumption of production accelerated significantly. Last week, short-process rebar production reached 116,900 tons, an increase of 90,900 tons week-on-week. The EAF capacity utilization rate was 20.71%, a substantial increase of 13.36 percentage points week-on-week.

Regarding inventory: Inventory continued to accumulate last week, becoming the core factor suppressing prices. Total rebar inventory reached 8.7568 million tons, an increase of 750,800 tons from the previous week. Specifically, social inventory increased from 5.6776 million tons (late February data) to 7.638 million tons (March 6th data), an increase of 699,900 tons, or 13.25%, week-on-week; steel mill inventory increased by 50,900 tons to 1.8848 million tons (including wire rod). The total inventory of the five major steel products reached 19.52 million tons, an increase of 1.0589 million tons, or 5.7%, week-on-week. The core logic behind inventory accumulation lies in the "transfer from mill inventory to social inventory"—steel mills are temporarily storing finished steel products with traders and logistics nodes, while end-user demand had not yet fully matched the growth rate of production.

On the demand side: Demand showed signs of marginal recovery, but the overall recovery strength remained insufficient. Last week, apparent consumption of rebar reached 982,300 tons, an increase of 176,900 tons, or 21.97%, compared to the previous week. The average daily transaction volume of construction materials was 56,600 tons, a 62.12% increase compared to the previous week. The average daily transaction volume of major traders nationwide increased by 42,500 tons compared to the previous week, and by 46.65% year-on-year. As of March 4th, the resumption rate of 10,692 construction sites nationwide was 23.5%, an increase of 14.6 percentage points compared to the previous week, and flat year-on-year (lunar calendar year); the funding availability rate was 35.5%, an increase of 6.5 percentage points compared to the previous week. The improvement in demand mainly stemmed from the concentrated resumption of infrastructure projects and restocking behavior by traders based on policy expectations, but demand for steel in the real estate sector remained weak, exhibiting a structural recovery characteristic.

Market Outlook:

In summary, analysts at SunSirs believe that the building materials market is expected to show a trend of initial decline followed by a rebound next week, with a generally upward bias. In the first half of the week, the market will still face the challenges of high inventory levels and slow demand recovery, and prices may continue to fluctuate weakly. In the second half of the week, with the acceleration of downstream resumption of work and improved funding availability, coupled with the gradual implementation of macroeconomic benefits released at important meetings, the market is expected to see a phased rebound. It is crucial to pay close attention to the pace of inventory reduction and the strength of end-user demand recovery. If inventory reduction proceeds smoothly and demand exceeds expectations, the potential for a price rebound will open up; conversely, upward pressure will be on the downside.

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