SunSirs: Strong Supply and Weak Demand Are Hard to Change, and the Wire Rod and Rebar May Fluctuate and Weaken

Price trend

According to SunSirs’ price monitoring, rebar and wire rod prices in Jiangsu, Zhejiang, and Shanghai fluctuated within a narrow range last week. As of the 8th, the average price of HRB400 rebar in these regions was approximately 3,331 RMB/ton, down 0.02% week-on-week; the average price of HPB300 high-strength wire rod was 3,457.5 RMB/ton, down 2.26% week-on-week.

Analysis review

Market: Coking coal prices rebounded last week, driving market sentiment to improve, raw material support moved upward, the market's willingness to push up prices increased, and markets across the country raised prices one after another, but the overall demand in the terminal market did not improve, so the price of wire rod and rebar fluctuated narrowly last week.

On the supply side, building materials production reached 3.0334 million tons last week, a slight increase of 79,300 tons month-on-month. Rebar production increased by 101,200 tons. Regionally, with the exception of North China, where production saw a slight decline, all other regions saw an upward trend. Heilongjiang, Jiangsu, Sichuan, and Guangdong saw the largest increases, driven by some steel mills resuming operations and increasing profits. Hebei saw a slight decline in production due to some mills shutting down for maintenance. Regarding wire rod production, last week's decline turned to an increase, totaling 8,200 tons. Regionally, the decrease was primarily concentrated in Northeast China, where supply decreased by 10,500 tons. Meanwhile, North China saw a significant increase of 22,200 tons. Production in other regions generally saw slight adjustments. By province, Jilin Province saw a significant decline, with weekly output decreasing by 7,200 tons, while Shanxi Province saw an increase of 12,400 tons. Production in other regions saw minor fluctuations. In terms of hot rolled coils, production dropped significantly last week, down 79,000 tons from the previous week, mainly due to production line maintenance at a steel plant in Northeast China.

Inventory: Last week, national building materials inventories reached 4.5145 million tons, a weekly increase of 316,000 tons. Factory inventories showed an upward trend, increasing by 60,500 tons month-on-month. Regionally, inventories in the Southwest and Northwest regions declined slightly, while inventories in all other regions showed increases. Jiangsu, Henan, and Heilongjiang provinces saw the largest increases in inventories. For wire rod coils, factory inventories saw a slight increase last week, totaling 4,700 tons. Regionally, East China saw the largest increase in inventory, with an increase of 13,800 tons. Mill inventories in other regions fluctuated slightly to varying degrees. Provincially, Zhejiang saw the largest weekly increase in inventory, with a weekly increase of 6,000 tons. Hot rolled coil production saw a significant decline last week. Factory inventories decreased slightly, primarily in North China. Market prices retreated after a surge last week, and market sentiment had revived, leading to a decline in demand. Despite the significant decline in production, factory inventories declined modestly.

On the demand side, last week's national average weekly trading volume reached 103,400 tons, up 9,320 tons from the previous week. Trading activity had recovered somewhat, exceeding 100,000 tons. While downstream demand was still increasing, it was showing a shrinking trend, with trading volume primarily circulating between traders. This was primarily due to the gradually warming weather, which had limited downstream production capacity, hindering the release of steel demand.

Market outlook

To sum up, analysts from SunSirs believe that the high temperature weather at this stage has led to a lack of release of terminal demand; as for steel mills, production profits have been restored after the increase in steel prices, and the production situation of steel mills has improved. The supply and demand of wire rod and rebar may maintain a trend of increasing supply and decreasing demand, and the destocking process of social warehouses is limited. At this stage, the price trend of wire rod and rebar is mainly affected by market sentiment. It is expected that prices of wire rod and rebar may rise first and then fall this week, and fluctuate in a narrow range.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.