SunSirs: Supply Decreased and Demand Increased, the Price of Rebar and Wire Rod May Rise Slightly in September

Price trend

According to SunSirs price monitoring, wire rod and rebar prices saw a slight decline in August, trending downward. As of the 29th, the average price of HRB400 rebar in the Jiangsu, Zhejiang, and Shanghai regions was 3,228 RMB/ton, down 3.11% from the beginning of the month; the average price of HPB300 high-strength wire rod was 3,377.5 RMB/ton, down 4.52% from the beginning of the month.

Factors affecting price

In August, the weekly production and total inventory of wire rod and rebar both increased.

Supply

As of August 28, weekly rebar production increased by 59,100 tons month-over-month to 2.2056 million tons, a 95,000-ton increase month-over-month. Social inventory increased by 212,600 tons month-over-month to 4.5377 million tons, a 696,300-ton increase month-over-month. Factory inventory decreased by 49,100 tons month-over-month to 1.6962 million tons, a 74,700-ton increase month-over-month.

Last week, building materials production reached 2.9961 million tons, a decrease of 37,100 tons from the previous month, continuing its downward trend. Rebar production decreased by 58,000 tons. Regionally, Northwest China, East China, Northeast China, and South-Central China saw the largest decreases, while South China and North China saw slight increases. Provincially, Xinjiang, Heilongjiang, and Hunan saw significant decreases due to short-term maintenance at individual steel mills, which shifted hot metal to other grades. Guangdong saw a slight increase in production due to the resumption of production at some mills and adjustments to rebar production. Wire rod production saw a slight increase of 20,900 tons this week. Regionally, this increase was primarily concentrated in East China, where supply increased by 19,000 tons, while North China saw a 7,700-ton increase. Production in other regions generally saw slight adjustments. Provincially, Zhejiang Province saw a significant increase, with weekly output increasing by 15,000 tons. Production in other regions saw minor fluctuations.

Market

In August, downstream construction site operations were significantly impacted by weather, resulting in a decline in overall steel demand and seasonal fluctuations in fundamental data. However, market sentiment was buoyed by news of "anti-involution" measures and rising coke prices, leading to increased speculative trading. However, market inventory remained under significant pressure, with traders primarily focusing on quick in-and-out transactions. Merchants maintained low inventories and showed a strong willingness to ship.

On the demand side, the national average weekly trading volume last week was 94,820 tons, a decrease of 7,460 tons from the previous week. Trading activity declined, with trading volume falling to just over 90,000 tons. Downstream terminal demand continued to decline, with trading volume declining after sentiment returned to rationality. This was primarily due to the gradual warming of the weather, which had limited downstream terminal operations, hindering the release of steel demand.

Future outlook:

In terms of demand, September is the traditional peak season for the market. Work at downstream terminals has begun to resume, and purchasing operations will gradually increase. In addition, the market has reported that there is an expectation of limited production in early September, and supply may be reduced. The impact of weather will weaken in September, and demand release from downstream construction sites will begin to increase. There is a possibility of a downward trend in inventory, market sentiment will return to rationality, and merchants are willing to maintain prices. Demand release in September is expected to increase.

In summary, with the assumption of a gradual resumption of terminal production in September, the wire rod and rebar market may shift to a fundamental situation of reduced supply and increased demand. Although market speculation has cooled, merchants remain willing to maintain prices. Given the strong expectations, it is expected that wire rod and rebar prices may rise first and then fall in September, with a volatile and stronger trend.

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