SunSirs: Supply Decreased and Demand Increased, Wire Rod and Rebar Prices May Rise Slightly

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 12th, the average price of HRB400 rebar in these regions was approximately 3,124 RMB/ton, a 0.97% decrease from the previous week. The average price of HPB300 high-strength wire rod was 3,290 RMB/ton, a 0.6% decrease from the previous week.

Analysis review

Market: Although the price of steel rose at the beginning of last week due to the increase in iron ore, the downstream demand did not improve, the market sentiment cooled, and the overall demand release in the terminal market continued to be weak. After the market sentiment cooled, steel prices fell again, so the price of wire rod and rebar fluctuated narrowly last week and tended to weaken.

On the supply side, building materials production reached 2.9683 million tons last week, a decrease of 72,400 tons from the previous month, continuing its downward trend. Rebar production continued to decline last week, totaling 67,500 tons. Regionally, production decreased in Northeast China, North China, and Central China, while production increased in the rest of the country. Provincially, Jiangxi, Henan, Anhui, Hubei, Xinjiang, and Hebei saw the largest decreases, driven by steel mill shutdowns for maintenance in some regions, resulting in insufficient or diverted molten iron supplies. Rebar production in Yunnan and Shanxi saw significant increases due to the resumption of rolling mills at some mills. Wire rod coil production saw a slight decrease last week, totaling 4,900 tons. Regionally, the decrease was primarily concentrated in Northeast China, where supply decreased by 11,300 tons, while supply increased by 11,000 tons in East China. Production in other regions generally saw small adjustments. Provincially, Shanxi saw the most significant decline, with weekly output decreasing by 12,600 tons. Production in other regions saw minor fluctuations.

Inventory: National building materials inventories reached 5.5954 million tons last week, a week-on-week increase of 195,500 tons. Factory inventories saw a slight decline last week, decreasing by 50,900 tons month-on-month. Regionally, inventory reductions were primarily concentrated in the Southwest and Central and South China regions. Sichuan, Henan, Jiangxi, and Yunnan provinces saw the largest decreases. For wire rod coils, factory inventories fluctuated slightly last week, with a total decrease of 3,800 tons. Regionally, Southwest China saw the largest inventory decrease, down 8,100 tons, while mill inventories in other regions fluctuated slightly to varying degrees. Provincially, Yunnan saw the largest weekly inventory decrease, down 6,200 tons. For rebar, for example, across the three major regions, East China, South China, and North China saw weekly inventory accumulations of 155,700 tons, 26,700 tons, and 3,300 tons, respectively. Across the seven major regions, with the exception of Central China and Northwest China, all showed accumulations. In terms of hot rolled coils, from the perspective of the three major regions, the South accumulated 20,000 tons on a weekly basis, while East China and North China decreased by 13,200 tons and 26,000 tons respectively on a weekly basis; from the perspective of the seven major regions, except for Central China, South China and Southwest China, other regions all showed a destocking state.

On the demand side, the national average weekly trading volume last week was 103,080 tons, a week-on-week increase of 6,120 tons. Trading had recovered somewhat, exceeding 100,000 tons, indicating that downstream terminal demand remained resilient. Weather conditions are expected to gradually improve after September, and downstream terminal operations will gradually resume, which is beneficial to the release of steel demand.

Market outlook

To sum up, analysts from SunSirs believe that the impact of weather factors will weaken in the later period, and the release of terminal demand will gradually recover; as for steel mills, the price support on the raw material side is relatively strong, so steel mills are willing to maintain prices. The supply and demand of wire rod and rebar may turn to a trend of reduced supply and increased demand. There is a possibility of destocking next week. At this stage, the price trend of wire rod and rebar is mainly affected by market sentiment. It is expected that prices may rise first and then fall next week, and fluctuate in a narrow range.

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