Price trend

According to price monitoring by SunSirs, prices for wire rods and rebar rose initially before falling in March. By the end of the month, the average price for HRB400 rebar in the Jiangsu-Zhejiang-Shanghai region stood at 3,177.16 RMB/ton—an increase of 1.02% compared to the beginning of the month—while the average price for HPB300 high-strength wire rods was 3,337.5 RMB/ton, up 0.15% from the start of the month.

Factors Affecting Price

According to data from SunSirs, both the weekly output and total inventory of wire rods and rebar declined in March.

Supply

Rebar production in March stood at a relatively low level compared to the same period in recent years. For the week ending March 26, national rebar output declined by 54,600 tons week-on-week to 1.9787 million tons—a decrease of 189,400 tons compared to the same period in the lunar calendar year. The primary reasons for this contraction in supply were twofold: first, firm iron ore prices and the implementation of the first round of coke price hikes led to narrower profit margins for long-process steel mills; and second, significant losses incurred by short-process steel mills dampened their enthusiasm for production. According to data from the National Bureau of Statistics, national rebar output for the January–February period totaled 26.91 million tons, representing a year-on-year decline of 9.1%. This pattern of low supply has provided a certain degree of downside support for steel prices.

In March, demand for rebar gradually entered its traditional peak season; however, weighed down by sluggish demand in the real estate sector, the overall intensity of demand release remained relatively weak. For the week ending March 26, apparent demand for rebar rose by 172,800 tons week-on-week to reach 2.2537 million tons—an increase of 50,200 tons compared to the same period in the lunar calendar year. Nevertheless, in absolute terms, demand remains at a low level; the national daily average trading volume for construction materials stood at approximately 96,000 tons, while rebar inventories in the Hangzhou market surged to a high of 1.52 million tons. Data from end-users further highlights the persistent drag exerted by the real estate sector. In January and February, nationwide real estate development investment totaled 961.2 billion yuan—a year-on-year decline of 11.1%—while the floor area of new housing starts fell by 23.1% to 50.84 million square meters. Although infrastructure investment grew by 11.4% year-on-year, providing some support for steel demand, it remains insufficient to fully offset the adverse impact of the real estate sector's downturn.

April Market Forecast:

Regarding Costs: Cost-side support continues to strengthen. The conflict between the U.S. and Iran is unlikely to see substantial short-term alleviation, and the risk of shipping disruptions in the Strait of Hormuz persists; consequently, global oil prices are expected to remain high and volatile. Elevated oil prices will continue to drive up steel production costs through various channels, such as transportation and fuel. Coking coal prices show room for a rebound; the price ratio of Mongolian 5 raw coal to WTI crude oil currently sits significantly below a reasonable level. Coupled with increased coal procurement efforts by certain Asian nations, coking coal prices are poised to trend upward. Iron ore prices remain at elevated levels, influenced by disruptions caused by hurricanes and the ongoing dynamics of long-term contract negotiations. Currently, blast furnace steel mills are hovering near their breakeven point; given the undervalued state of steel products, the market is particularly sensitive to cost fluctuations, meaning that rising costs will be the primary driver of future price trends.

Regarding Demand: A seasonal improvement in demand is anticipated. April marks a traditional peak season for consumption; the favorable temperatures facilitate construction activities, and apparent demand at the end-user level is expected to continue its upward trend. The issuance of special-purpose bonds is proceeding at a faster pace than in previous years, and the growth rate of infrastructure investment remains at a high level, thereby providing a floor of support for steel demand. Surveys conducted by BaiNian Construction indicate that, as of mid-March, the nationwide construction site resumption rate had recovered to 62%, with further room for improvement in the period ahead. Furthermore, leading up to the Qingming and May Day holidays, downstream sectors are exhibiting a certain level of demand for inventory stocking.

Supply Side: The pattern of low supply persists; crude steel output for January and February declined by 3.6% year-on-year. Driven by initiatives to curb excessive internal competition and mandates for energy conservation and carbon reduction, the curtailment of steel production remains the dominant theme in the medium to long term. Steel mills are expected to maintain a "production-based-on-sales" strategy, which may lead to a gradual slowdown in the pace of production recovery; this low-supply environment is conducive to improving the structural balance between supply and demand.

Market Outlook:

In summary, the construction steels market in April is expected to witness a tug-of-war between cost support and demand constraints, exhibiting an overall pattern of volatile yet upward-leaning movement. The pass-through of energy costs stemming from geopolitical conflicts remains the primary market driver. On the supply side, the interplay between a low production base and expectations of resumed output renders supply relatively manageable; meanwhile, although the demand side is currently in its peak season, its upside potential remains limited due to the sluggishness of the real estate sector. In terms of trading strategy, it is advisable to focus primarily on establishing positions during market dips while avoiding the blind pursuit of rising prices; furthermore, market participants should closely monitor evolving geopolitical dynamics, the pace of resumed hot metal production, and the actual realization of end-user demand.

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