SunSirs: With both Supply and Demand Weak, Wire Rod and Rebar Will Fluctuate Within a Narrow Range in the Short Term

Price trend:

According to price monitoring by SunSirs, rebar and wire rod prices in the Jiangsu, Zhejiang, and Shanghai regions fluctuated within a narrow range last week. As of the 12th, the average price of HRB400 rebar in the Jiangsu, Zhejiang, and Shanghai regions was approximately 3,192 RMB/ton, a decrease of 1.3% week-on-week; the average price of HPB300 high-strength wire rod was 3,390 RMB/ton, remaining unchanged week-on-week.

Market Analysis

Market Overview: Last week, the steel market experienced weak supply and demand, and market sentiment became more rational. Although steel mill production remained low and social inventories continued to decline, weak end-user demand led to downward pressure on construction steel prices. However, thanks to strong support from raw material prices, steel prices remained stable at the bottom, and the overall downside potential was limited. The market is expected to continue a volatile and slightly weaker trend in the short term, but with cost support, a significant price correction is unlikely.

Supply side: Last week, building materials production totaled 2.5452 million tons, a decrease of 148,000 tons compared to the previous week, indicating a continued decline in production. Rebar production continued its downward trend, mainly due to production cuts at steel mills in Hubei, Shanxi, Jiangsu, and Hebei provinces due to insufficient molten iron or production line maintenance. Only the Southwest and Northwest regions saw a slight increase in production. Wire rod production also decreased slightly, down by 42,700 tons week-on-week, with Jiangsu province accounting for a decrease of 13,000 tons, leading to the most significant reduction in the East China region. Overall, the production cuts had expanded from rebar to wire rod, and supply-side pressure continued to ease.

Inventory side: Last week, national building materials inventory totaled 5.7731 million tons, a decrease of 281,300 tons week-on-week. Last week, inventory continued to decline, but with structural differences. Rebar steel mill inventory decreased by 18,800 tons, with East China, Southwest China, and North China being the main areas of inventory reduction. Regarding social inventory, except for a slight increase in the northern region, inventory reduction was significant in East China and other areas (a weekly decrease of 142,600 tons). Wire rod inventory remained largely unchanged, with a slight increase of 900 tons, of which Zhejiang saw an increase of 4,000 tons. Overall, the inventory pressure on construction steel continued to ease, and the scope of inventory reduction for hot rolled coils was even wider.

Demand side: In the week before last, the national average weekly transaction volume was 98,240 tons, a decrease of 780 tons week-on-week. Construction material transaction volume decreased slightly, but remained above 90,000 tons, indicating that downstream end-user demand remained somewhat weak. Future demand performance will depend on the operating conditions of downstream end-users.

Market Outlook

In summary, SunSirs’ analysts believe that the market is expected to continue its range-bound fluctuations next week. The core fundamental contradictions were not prominent: on the one hand, steel mill production continued to decline, inventories were being depleted, and strong support from raw material prices collectively provided a floor for steel prices; on the other hand, end-user demand was weak and was gradually entering the traditional seasonal off-season, limiting the upward potential of prices. Under this tight balance of weak supply and demand, it is expected that national construction steel prices will lack a clear directional driver next week and will mainly operate within a range-bound pattern.

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