Price trend

According to price monitoring by SunSirs, steel rebar and wire rod prices in the Jiangsu, Zhejiang, and Shanghai regions fluctuated within a narrow range last week. As of the 23rd, the average price of HRB400 rebar in the Jiangsu, Zhejiang, and Shanghai regions was approximately 3,207 RMB/ton, a week-on-week decrease of 1.28%; the average price of HPB300 wire rod was 3,415 RMB/ton, a week-on-week decrease of 2.22%.

Market analysis

Market Overview: Last week, the construction steel market showed a volatile downward trend, primarily due to overall weak end-user demand. However, the market did not experience panic, mainly thanks to some resilience provided by pre-holiday stocking demand. The slow accumulation of social inventory indicated a tight balance between supply and demand. As of the 23rd, the "weak reality" and "strong policy expectations" continued to be in a tug-of-war, while low inventory levels and costs provided support, resulting in a generally stable market sentiment.

Supply side: Last week, building materials production reached 2.7468 million tons, a week-on-week increase of 108,900 tons, representing a slight increase in production. Steel supply rebounded significantly last week, primarily driven by a substantial increase in rebar production. National rebar production reached 1.9955 million tons, a significant increase of 92,500 tons week-on-week, mainly led by the Central China region, with Hubei and Jiangsu provinces contributing the main increase due to the resumption of production lines. Meanwhile, wire rod production only increased slightly by 16,400 tons, a relatively moderate change. Overall, the supply side had ended its previous contraction and was showing a shift from decline to increase. The market needs to pay attention to the matching degree between the speed of production recovery and the resilience of demand in the future.

In terms of inventory: Last week, national building materials inventory reached 5.447 million tons, a week-on-week increase of 148,700 tons. Last week, the steel inventory structure showed divergence, with the recovery in supply beginning to be reflected in mill inventories. Rebar mill inventories stopped declining and began to accumulate, increasing by 63,200 tons week-on-week. The accumulation was mainly concentrated in North China and Central China, indicating that after the increase in production, the speed of steel mill shipments slowed down, and pressure began to emerge. In contrast, the increase in wire rod mill inventories was smaller. Overall, North China became the core area of inventory accumulation, which corresponds to the increase in production in that region. Hot-rolled coil inventory performed slightly better, with inventory reduction still occurring in North China and Central China. Overall, with the continued recovery of supply, the inventory turning point has initially appeared, and it is necessary to be vigilant about the pressure that accelerated inventory accumulation will exert on market sentiment and prices in the future.

Demand side: Last week, the national average weekly transaction volume was 77,780 tons, a decrease of 14,080 tons compared to the previous week. The transaction volume of building materials decreased slightly, falling below 80,000 tons, indicating a gradual reduction in downstream end-user demand.

Market outlook

In summary, SunSirs’analysts believe that the market focus will shift to winter stocking policies next week. Fundamentals remained stable, with a weak supply-demand balance and healthy inventory levels providing support for prices. However, as steel mills release their winter stocking policies, market sentiment and speculative demand will be significantly influenced by the pricing terms, potentially leading to short-term emotional fluctuations. Against the backdrop of seasonally weaker end-user demand, prices will seek a new equilibrium between policy dynamics and fundamentals.  Therefore, it is expected that national construction steel prices will fluctuate and adjust accordingly.

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