In recent years, affected by the adjustment in the real estate market, the strong seasonal characteristics of the "Golden September and Silver October" period for the black commodity sector have weakened. Reinforcing steel with threads First and foremost, it has become commonplace for peak seasons to fail to deliver their usual surge in activity. During this year's National Day holiday, steel inventories piled up at a rate exceeding the historical average, highlighting growing inventory pressures, while demand showed no significant improvement. Rebar prices It’s trending with mild fluctuations. However, raw material prices remain firm, and the industry chain has yet to experience any significant negative feedback.
Currently, data such as new housing project starts and construction areas continue to adjust, while market expectations for rebar demand remain weak. To ease inventory pressures, steel mills have implemented production-control measures, resulting in rebar output at this year's lowest level. However, the supply-demand structure still faces significant challenges. Notably, there is a clear shift in steel production: some mills are switching from rebar to hot-rolled coils due to widening profit margins between the two products, while others are doing so because of the availability of semi-finished materials. Steel billet Exports are performing well, prompting a shift to producing steel billets. In fact, Iron-melting output Remains at a high level. As of October 10, data from MySteel showed that the average daily molten iron output of 247 steel enterprises continued to stay above 2.4 million tons. Therefore, it is crucial to remain vigilant about the downward pressure on prices, driven by weakening demand for hot-rolled coils and a potential decline in steel billet exports.
The primary risks associated with hot-rolled steel lie in the expected decline in domestic demand and mounting pressure on exports during the fourth quarter. Recently, downstream Cold Rolling Galvanized Orders are shrinking, posing challenges to the resilience of demand. Despite production remaining at high levels, current hot-rolled coil inventory levels—and the pace at which they’re accumulating—are both higher than last year’s corresponding period. On the export front, the EU plans to reduce steel import quotas and is considering imposing a 50% tariff, while escalating trade tensions between China and the U.S. have further heightened uncertainties surrounding steel exports. For steel billets, key risks include squeezed profit margins and the looming threat of future anti-dumping sanctions. According to data from the General Administration of Customs, China’s steel billet exports surged to 1.76 million tons in August, hitting yet another record high—up 12% month-on-month and a staggering 230% increase compared to the same period last year. However, steel billet producers are already experiencing losses, raising concerns that output could decline in the near term.
Additionally, amid frequent external trade remedy measures—or anti-dumping investigations—targeting finished steel products, steel billets, as semi-finished goods, have benefited from "policy dividends" in certain regions, leading to a surge in exports. However, it’s worth noting that, on the one hand, steel billets are highly energy-intensive; exporting them in large quantities not only squanders China’s abundant deep-processing capabilities but also intensifies fierce competition at lower market levels. As a result, in mid-June, the China Iron and Steel Association already submitted a proposal to relevant national authorities recommending restrictions on steel billet exports. On the other hand, if steel billet exports continue to soar unchecked, anti-dumping investigations could inevitably spread to this product category as well.
From another perspective, the high-speed rail's water production has, to some extent, also supported raw material prices. Since August, on the raw material side Coal And Iron ore prices Performance has clearly outpaced finished steel products, squeezing steel mills' profits. As of October 13, rebar production under the long-process route recorded profits below 100 yuan per ton, while Jiangsu's short-process steelmaking using valley electricity saw profits hovering around -100 yuan per ton. Therefore, with solid fundamentals on the raw-material side and no synchronized downward trend with finished steel products, the cost support for rebar remains intact, limiting the room for further price declines.
From a fundamental perspective, the rebar market lacks a key catalyst to break through its current stalemate, making it essential to keep an eye on macroeconomic factors. Recently, there have been signs of renewed tensions in U.S.-China trade disputes, as U.S. President Trump announced that tariffs on Chinese products would be increased by 100% starting November 1. However, in the short term, the impact is expected to be milder than what was seen in April. Moving forward, investors will closely monitor the progress of U.S.-China negotiations—any shift in stance could unexpectedly boost market sentiment. Meanwhile, the market remains cautiously optimistic about several upcoming events: the Fourth Plenary Session of the 20th Central Committee scheduled for late October, the Federal Reserve’s interest-rate meetings in October and December, and the year-end meeting of the Politburo. As macroeconomic influences continue to grow in the months ahead, any divergence between market expectations and reality could trigger a temporary rally in the rebar market.
In the short term, on the fundamentals of threaded steel, there’s a clear contradiction between weak demand and firm costs—but this hasn’t yet escalated into a negative feedback loop, limiting its impact on prices. Investors should closely monitor future inventory trends. Meanwhile, the macro landscape remains uncertain, with concerns about escalating trade tensions as well as expectations tied to key policy announcements from upcoming meetings. Trading dynamics are evolving rapidly, so traders should stay vigilant against rising volatility in the market. Overall, threaded steel is likely to continue its relatively weak, choppy trend amid these competing factors—but caution is advised, as unexpected shifts in market sentiment could trigger temporary downturns. (Author’s Affiliation: Zhongtai Futures)
