Price trends

According to price monitoring by SunSirs, the domestic construction steel market last week (July 10–17) continued the trend of low-level fluctuation seen since the start of July; prices for rebar and wire rods seesawed near their yearly lows, resulting in a stalemate where prices struggled to either fall further or rise significantly. Market sentiment remained cautious, though the pace of decline had slowed markedly following the sustained drops seen earlier. As of July 17, the average price of HRB400 rebar in the Jiangsu-Zhejiang-Shanghai region stood at approximately 3,096.44 RMB/ton, up 0.08% week-on-week, while the average price of HPB300 high-speed wire rod was 3,335 RMB/ton, up 0.23% week-on-week.

Regarding the spot market, data from SunSirs shows that as of July 13, the benchmark price for rebar stood at 3,085.5 RMB/ton, a slight decline of approximately 0.29% from the 3,094.34 RMB/ton recorded on July 10; meanwhile, wire rod prices remained largely stable at around 3,327.5 RMB/ton.

Regarding futures, the dominant rebar contract (2610) closed at 3,115 RMB/ton on July 15, trading at a slight premium to the spot price, which indicates a modest recovery in market sentiment. In terms of the spot-futures spread, the difference between the spot price of rebar and the dominant contract price was approximately -19 RMB/ton on July 16, meaning the spot and futures prices were essentially at parity.

Market analysis

In terms of trading activity, the market remained quiet last week; traders generally adopted low-inventory strategies, and end-user procurement was primarily driven by immediate needs, underscoring the prevailing "weak reality" of the market.

Supply side: Signals of supply contraction have emerged, though their intensity remains insufficient. During the week of July 3–10, rebar production shifted from decline to growth, rising by 32,700 tonnes to 2.1652 million tonnes; this increase was primarily driven by the resumption of production at certain steel mills in North and East China. However, as steel mills' profit margins continued to shrink last week—pushing some enterprises close to the break-even point—there was a growing willingness to voluntarily cut production, thereby limiting the momentum for further supply expansion. Expectations regarding crude steel production control policies are also intensifying, with the market anticipating stricter output restrictions ahead.

On the inventory front, the pressure of high stock levels remains a looming threat. At the end of June, inventories of the five major steel products were 2.61 million tonnes higher year-on-year—an increase of 19.5%—with stocks of rebar and wire rod surging by 24.5% and 32.4%, respectively. The dampening effect of these high inventory levels on spot prices is evident; any attempt at a price rebound faces the practical hurdle of inventory reduction.

Regarding costs and profits, the cost side is establishing a temporary floor. For coke, multiple rounds of price hikes have been fully implemented; meanwhile, coking coal supply is recovering slowly due to constraints from safety inspections, resulting in an overall upward shift in the cost baseline. Estimates indicate that by July, steel mills had largely exhausted their inventories of low-priced raw materials and fuels; with contract coal prices expected to rise by approximately 300 RMB/ton, steel production costs are set to increase further. Operating with thin margins or even losses, steel mills are generally more determined to support prices, thereby limiting the potential for a sharp decline.

Demand side: While the off-season pattern persists, expectations for marginal improvement are rising. July falls within the traditional construction off-season—characterized by high temperatures and heavy rainfall—limiting the release of end-user steel demand. However, with the rainy season in the south expected to gradually draw to a close, there is potential for a marginal improvement in construction conditions. More notably, the market holds strong expectations for intensified pro-growth policies following the late-July meeting; furthermore, the accelerated issuance of special-purpose bonds has improved funding for infrastructure projects, paving the way for a subsequent recovery in demand.

Market outlook

In summary, the construction steel market spent last week (July 10–17) fluctuating at low levels, with a temporary balance struck between "cost support" and the "pressure of high inventory." In the short term, the prevailing trend remains one of fluctuation and bottom-building; in the medium term, the market's direction will hinge on whether policy measures and supply contractions can generate a combined effect. Market participants are advised to closely monitor policy signals from the late-July meetings, as well as trends in weekly steel mill output and inventory levels, to identify potential market turning points early. Until clear signals emerge, maintaining a flexible operational strategy—characterized by low inventory and rapid turnover—remains the prudent choice.

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