Rebar Market Review And Post-Chinese New Year Outlook

During the CNY, the spot price of construction steel products across the country mainly remained stable, market transactions were stagnant, and traders basically started construction from Feb 17 to Feb 19. On the first day after the holiday, driven by sentiment, spot quotations rose slightly by 10-30 yuan/mt. On the supply, most blast furnace plants maintain their early production during the festival, while electric furnace plants continue to be in a shutdown stage and will resume work around Feb 24. There will be little supply pressure in the near future. In terms of inventory, the arrival of goods in the holiday market is normal. Some resources have arrived but have not yet been put into storage. It is expected that the social warehouse may reach the peak in the 3-4 weeks after the CNY; construction sites are suspended during the holiday, and some steel plants who supply steel to construction sites saw accumulation of resources in the factory's internal and external warehouses this year greater than in previous years. It is expected that the inventory may be difficult to significantly reduce before March. However, considering that the electric furnace plant has not started operation, the overall factory inventory accumulation period may be shortened.

Looking ahead, there is no support in short-term, and the market will be dominated by strong sentiment. During the holidays, major banks have accelerated their follow-up on the “white list” of real estate financing, and the market has expectations for later macro policies; at this stage, there is no major pressure on the supply side, and manufacturers with low inventories are cautious and preferential. In the short term, building materials prices may rise, however, in the medium to long term, the cold wave weather will affect the pace of demand release in mid-to-late February, and market sentiment may cool down. Secondly, if there is no demand support, the sluggish demand will be difficult to support spot prices. Taken together, building materials prices still have room to grow, but in the medium and long term, we still need to pay attention to the fulfillment of demand and beware of the risk of falling back from high levels.