Rebar demand is expected to rebound this week, with data showing strength. Steel prices may consolidate at a relatively strong level in the short term.
On the afternoon of July 3, as the latest domestic steel production and inventory data was released, domestic steel futures prices rose sharply. In response, the Guangda Futures black team stated that although the spot market for rebar remains weak in both supply and demand, the data this week showed strength, inventories are low, and expectations for the advancement of supply-side reforms in the overcapacity industry have been boosted again, leading to a likely short-term strengthening consolidation in rebar futures.
Specifically, My Steel （ Mysteel ）data shows that as of the week ending July 3, national rebar production rebounded by 32,400 tons to 2.2108 million tons, a year-on-year decrease of 156,700 tons; social inventories rebounded by 13,400 tons to 3.6474 million tons, a year-on-year decrease of 2.2107 million tons; factory inventories fell by 51,300 tons to 1.8047 million tons, a year-on-year decrease of 203,100 tons; and rebar apparent demand increased by 49,600 tons to 2.2487 million tons, a year-on-year decrease of 99,100 tons. "Rebar production has rebounded for the third consecutive week, total inventories have continued to decline slightly, and apparent demand has rebounded, indicating strong data," commented Qiu Yuecheng, director of black metal research at Guangda Futures.
According to him, in terms of supply, steel prices have rebounded continuously recently, further increasing steel mill profits. Coupled with the recent narrowing of the price difference between rebar and other steel products, weekly rebar production has continued to rise. In terms of demand, China is currently in the peak summer consumption off-season, and terminal demand remains low. "However, with the rebound in prices, speculative demand has increased somewhat."
Mysteel monitoring data shows that the average daily transaction volume of building materials nationwide from Monday to Wednesday was 110,100 tons, a week-on-week increase of 11.58%; the average daily shipment volume of rebar in Hangzhou was 30,500 tons, a week-on-week decrease of 3.17%, and the Hangzhou market rebar inventory has fallen to 606,000 tons.
In addition, Qiu Yuecheng also mentioned that environmental restrictions and production cuts have been intensified in the Tangshan area recently, with sintering machines limited to 30% production from July 4 to 15, which has had a certain impact on the production of some steel mills. Although the current supply and demand for spot rebar in the industry is weak, inventories are low, billet exports remain strong, with some steel mills receiving export orders until August, and steel mills continuing to increase prices for specifications.
Furthermore, Qiu Yuecheng added that the sixth meeting of the Central Financial Committee held on July 1 emphasized the need to govern low-price and disorderly competition among enterprises in accordance with laws and regulations, guide enterprises to improve product quality, and promote the orderly exit of backward production capacity. "Affected by this, market expectations for the advancement of supply-side reforms in the overcapacity industry have been boosted again, giving a boost to market sentiment."
Overall, the Guangda Futures black team expects that the rebar futures market will likely consolidate with a slightly stronger bias in the short term.
