SunSirs: Weak Supply and Stable Demand, Destocking, Wire Rod and Rebar Prices May Rebound Slightly

Price trend

According to SunSirs price monitoring, wire rod and rebar prices saw a slight decline in September, trending downward. As of the 29th, the average price of HRB400 rebar in Hangzhou was 3,175.5 RMB/ton, down 0.14% from the beginning of the month. The average price of HPB300 high-strength wire rod in the Jiangsu, Zhejiang, and Shanghai regions was 3,357.5 RMB/ton, down 0.59% from the beginning of the month.

Analysis of Influencing Factors

According to data from SunSirs, in September, the weekly production and total inventory of wire rod and rebar both decreased.

As of September 28, the weekly output of rebar increased by 100 tons month-on-month to 2,064,600 tons, and decreased by 141,000 tons month-on-month; the social inventory decreased by 133,200 tons month-on-month to 4,718,900 tons, and increased by 181,200 tons month-on-month; the factory inventory decreased by 6,600 tons month-on-month to 1,644,100 tons, and decreased by 52,100 tons month-on-month.

On the supply side, building materials production reached 2.9496 million tons last week, a month-on-month increase of 32,700 tons, indicating some recovery. For rebar, national production remained essentially flat (-100 tons), with significant regional differentiation. Production saw slight decreases in East China, South China, and Northwest China, with Guangxi, Fujian, and Anhui experiencing production reductions due to maintenance. Sichuan and Shanxi saw increases due to mill resumptions and hot metal transfers. For wire rod, production accelerated (+32,600 tons), with North China, Central China, Southwest China, and Northwest China leading the growth. Shanxi (+14,200 tons) and Henan contributed significantly due to the completion of maintenance, while East China saw a slight decline. Short-term fluctuations in building materials production were driven by the pace of steel mill maintenance and resumption, with significant regional capacity adjustments impacting overall supply. Continue to pay attention to changes in molten iron transfer and production plans.

Market: Downstream construction sites continued to operate smoothly in September, and overall steel demand continued to increase, though below market expectations. Fundamental data remained relatively stable. Initially, market sentiment was high, driven by news of "anti-involution" policies and rising coke prices, leading to increased speculative trading. Later, however, due to downward pressure from overseas macroeconomic factors, market inventories came under significant pressure, with traders maintaining low inventories and a strong willingness to ship.

On the demand side: Last week, the national average weekly trading volume was 105,500 tons, down 1,000 tons from the previous week. While trading activity declined, trading volume remained above 100,000 tons. Downstream terminal demand continued to release, but fell short of market expectations. Trading volume declined slightly as sentiment returned to rationality, but downstream demand remained resilient. With continued production restarts, demand is expected to increase in October.

Market outlook

In terms of demand, the steel market in October is still in its traditional peak season, with downstream terminals continuing to operate and purchasing operations gradually increasing. In addition, steel mills have been cutting production due to poor profits since September, and supply may be reduced. The impact of weather will weaken in October, and demand from downstream construction sites will be released steadily. Inventories may continue to decline, and merchants have a strong willingness to maintain prices. Coupled with the expected increase in demand in October, it is good for building materials prices.

In summary, with steady terminal production restarts in October, the wire rod and rebar market is likely to maintain its fundamentals of reduced supply and stable demand. Although market speculation has cooled, traders remained willing to maintain prices. Furthermore, low steel mill output is favorable for destocking building materials, while strong support from raw materials is expected. Therefore, wire rod and rebar prices are expected to decline first, then rise, with a volatile and stronger trend in October.

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