SunSirs: The Fundamentals Were Weak, and the Price of Wire Rod and Rebar Fell in August

Price trend

According to the price monitoring of SunSirs, the price of wire rod and rebar first rose slightly and then fell in August. As of the end of the month, the average price of HRB400 rebar in Jiangsu, Zhejiang and Shanghai was 3,978.89 RMB/ton, down 3.48% from the beginning of the month; the average price of HPB300 high line was 4,192 RMB/ton, down 6.6% from the beginning of the month.

Analysis review

According to the above chart, in August, the weekly production of wire rod and rebar increased, and the total inventory decreased.

Market: From January to July, the housing construction area of real estate development enterprises was 8,591.94 million square meters, a year-on-year decrease of 3.7%.Among them, the residential construction area was 6,070.29 million square meters, down 3.8%. The newly started housing area was 760.67 million square meters, down 36.1%. Among them, the newly started residential area was 559.19 million square meters, down 36.8%. The completed housing area was 320.28 million square meters, down 23.3%. Among them, the completed residential area was 232.79 million square meters, down 22.7%.

Supply and demand: In August, weekly production fell and weekly inventories rose. The steel industry's crude steel production requirements in 2022 have decreased year-on-year, but the administrative production reduction policy has failed, and the output mainly depends on market-based production reduction. It is expected that the annual output will drop by 25 million tons. In 2022, the overall demand for crude steel will be weak due to the real estate drag, with negative growth in the first three quarters. At present, the actual consumption of crude steel from January to September has dropped by about 5% year-on-year.

Market outlook

To sum up, in August, due to high temperature and power cuts, the fundamentals of supply and demand for wire rods and rebars were weak. After the rapid and substantial decline in supply, inventories also showed a trend of rapid depletion. In terms of demand, housing enterprises were still in a downturn. No significant improvement has been seen yet. In September, there was no sign of improvement in real estate sales and construction. It is expected that the peak season characteristics will not be obvious compared with previous years, but the price may be better than that in August. It is expected that the price of wire rod and rebar will fluctuate strongly in September.

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