SunSirs: Cost-Driven Factors Pushed Steel Prices Upward After the Holiday, and Rebar Is Expected to Fluctuate at High Levels in the Short Term

Price trend

According to price monitoring data from SunSirs, last week (May 1–May 9)—marking the first full trading week following the "May Day" holiday—the rebar and wire rod markets exhibited a generally firm trend. Both futures and spot prices saw their trading ranges shift upward; however, the pace of growth slowed somewhat during the latter half of the week. As of May 9, the average price for HRB400 rebar in the Jiangsu-Zhejiang-Shanghai region stood at approximately 3,274 RMB/ton, representing a week-on-week increase of 2.16%; meanwhile, the average price for HPB300 high-speed wire rod reached 3,417.5 RMB/ton, up 2.47% from the previous week.

In the spot market, as of May 9, the average price of Grade 3 seismic-resistant rebar across 31 major cities nationwide stood at 3,484 RMB/ton—an increase of approximately 2.17% compared to pre-holiday levels. Regionally, the market witnessed broad-based gains across the country: manufacturers in the North collectively pushed prices higher, while the South saw an upward trend driven by the interplay between futures and spot markets, with weekly price increases generally ranging from 40 to 70 RMB/ton. In the Shanghai region, mainstream rebar prices rose to between 3,230 and 3,250 RMB/ton, marking an increase of 30 to 50 RMB/ton over pre-holiday figures.

In the futures market, the Rebar 2610 contract demonstrated strong performance, gapping up sharply following the holiday break and briefly touching a nearly seven-month high. As of the night session on May 8, the benchmark contract closed at 3,276 RMB/ton—an increase of approximately 62 RMB/ton compared to pre-holiday levels. Market sentiment regarding capital flows has warmed up significantly, with long positions actively increasing their holdings.

In terms of trading volume, on the first day following the holiday, mainstream traders' sales of construction materials reached 158,700 tons—marking a new high for the year. However, in the subsequent days, the pace of end-user procurement slowed, leading to a sequential decline in transaction volumes; the market consequently exhibited a pattern characterized by "smooth sales at lower price points, but limited acceptance at higher ones."

Supply Side: The supply side has exhibited a marked contraction. Last week, the weekly output of rebar stood at 1.9665 million tons—a week-on-week decline of 4.96% (a reduction of 102,700 tons). This marks the second consecutive week of decline, placing production levels at a low point relative to the same period in recent years. The primary drivers behind this supply contraction are concentrated maintenance activities across production lines at various steel mills, as well as the temporary impact of environmental production restrictions in northern regions. Concurrently, in late April, the average daily output of pig iron and crude steel among key steel enterprises declined on a month-on-month basis, indicating that these firms have effectively managed the strategic rhythm of "controlling production and reducing inventory."

However, with steel mill margins recovering—specifically, the gross profit per ton of rebar produced via blast furnaces has risen to 134 yuan, and the profitability rate has climbed to 60.17%—mills have shown increased enthusiasm for production. Output is projected to see a modest rebound next week from its current low levels, though the absolute increase is expected to be limited.

Regarding inventory: Last week, total rebar inventory stood at 7.2706 million tons—a marginal week-on-week decline of 0.16% (a reduction of 11,600 tons). This marked the eighth consecutive week of decline; however, the pace of inventory drawdown slowed significantly. Specifically, social inventory fell by 71,400 tons to 5.4987 million tons, while steel mill inventory reversed its downward trend to show an increase, reflecting a shift in inventory pressure from the social sector back toward the steel mills.

Current total inventory remains approximately 17% higher than in the same period last year, placing absolute inventory levels at a relatively elevated position. Should demand subsequently weaken seasonally while supply experiences a moderate recovery, the pace of inventory destocking will slow further; by month-end, inventory levels could even reverse course—shifting from a decline to an increase.

On the demand side, the market has exhibited a pattern characterized by a "surge followed by a subsequent retreat." Following the holiday period, end-users engaged in concentrated restocking; while the apparent consumption of rebar stood at 2.5044 million tons in the week prior to the holiday, holiday-related disruptions caused this figure to fall to 1.9788 million tons last week—a week-on-week decline of 19.28%. It should be noted, however, that weekly data are significantly impacted by the discontinuity caused by the holiday break; consequently, the magnitude of the observed decline in demand may be somewhat "distorted."

In terms of actual market activity, trading volume on the first day following the holiday reached a new year-to-date high; however, over the subsequent three days, the pace of end-user procurement slowed markedly, and speculative demand failed to fully materialize. Infrastructure investment has maintained its resilience, with major engineering projects providing significant underlying support; conversely, the year-on-year growth in new real estate construction starts remains negative, suggesting that the current weakness in steel demand for property development is unlikely to abate.

Market Outlook

In summary, the rise in rebar prices last week was the result of a dual-pronged driver—specifically, "cost-push factors combined with post-holiday inventory replenishment"—rather than a trend reversal signaling a comprehensive recovery in demand. In the short term, cost support and low supply levels provide a floor for prices; however, the ceiling on demand and the pressure of seasonal weakening limit the potential for further upside. Based on this comprehensive assessment, it is projected that the price center of gravity for rebar in mid-to-late May will likely shift slightly downward compared to April, with prices generally continuing to fluctuate within a defined range.

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