The cost end support of rebar is strong.

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SMM: data show that as of November 30, the price of HRB400 20mm rebar in Shanghai fell by 120 yuan to 4130 yuan / ton, or about 3%, compared with the previous week; the price of the main rebar futures contract fell 71 yuan to 3906 yuan / ton, a drop of about 1.8%. At present, the spot price of rebar is still high, although the main contract basis has narrowed compared with the previous week, but it is still more than 200 yuan / ton, supporting the disk price.

On the supply side, rebar production last week slightly increased to 3.6009 million tons from the previous month, an increase of 1.1% over the same period last year, in line with the previous forecast that "weekly output will stabilize at around 3.6 million tons." In terms of operating rate, as of November 27, the operating rate of blast furnaces of 247 steel mills across the country was 86.33%, slightly lower than the previous month, an increase of 10.3% over the same period last year; capacity utilization was 92.47%, an increase of 0.9% from the previous month, and an increase of 15.7% over the same period last year. Over the weekend, the Tangshan municipal government decided to tighten controls on the original environmental protection plan, starting at 18:00 on November 29th and ending at 12:00 on December 2nd. The latest control measures basically limit the work of the sintering machine, so it has little impact on the output of the blast furnace. In terms of profits, finished wood prices rose and fell last week, raw material prices are relatively strong, and profits have narrowed. Among them, the average spot profit of East China long process rebar is about 447 yuan / ton on the 5th, which is 53 yuan lower than the previous month; the average spot profit of North China billet rolling mill is about 122 yuan / ton, which is basically the same as the previous month; the average spot profit of East China short process flat power plant is about 125 yuan / ton on the 5th, which is 95 yuan lower than the previous month. Therefore, under the condition that the profit per ton of steel is relatively high and the production limit is not strict, the production enthusiasm of steel mills is still high, and the output of rebar is expected to increase this week.

On the demand side, there was a lot of rain and snow in the central, eastern and northern parts of the country last week. The national average trading volume of building materials was only 181900 tons on the 5th, down 19.9% from the previous month, and the turnover dropped more than expected. Apparent rebar consumption fell 8 per cent month-on-month to 3.9721 million tons, up 9.7 per cent from a year earlier. Although the apparent consumption fell below 4 million tons, it was still better than the market expected, so after the consumption data were released, rebar reduced its positions and went up to repair the pessimistic mood at the beginning of the week. According to the Meteorological Bureau, Rain Water in the central and eastern region subsided this week, and the weather improved, which is conducive to construction. As a result, after entering December, demand faces a seasonal decline, but the rate of decline is still better than expected, and the demand side is still resilient.

On the inventory side, total rebar inventories fell 5.2 per cent month-on-month to 6.8387 million tonnes last week, compared with a 9 per cent drop the week before, and began to accumulate stocks in the same period last year. Specifically, steel mill inventories rose 0.2 per cent to 2.3344 million tons month-on-month, while social inventories fell 7.7 per cent to 4.5043 million tons month-on-month. The accumulation of factory and warehouse is expected and the growth rate is relatively small. Although the decline of social inventory has narrowed compared with the previous week, it is still fast to the same period in previous years, and the demand is more resilient. From the perspective of absolute inventory, the current social treasury is only about 1.67 million tons higher than the same period last year, which has basically returned to the normal level, and high inventory is no longer the main pressure on prices.

To sum up, under the combined action of high profits per ton of steel and slightly loosening of production restrictions on environmental protection, it is expected that the output of rebar will not decrease significantly this week, but will be stable. As the weather gradually improves, the demand side is expected to improve this week, with a relative balance between supply and demand. In Shanghai, the price difference between rebar and rebar, wire rod and rebar begins to narrow, which will restrain the rising speed of rebar to a certain extent. But at the same time, the fundamentals of iron ore and coke are still good, prices or high consolidation, the cost side to support the price of finished materials. Therefore, for the rebar 2101 contract, the weakening of seasonal demand has basically been digested, and under the support of cost, there is limited room for rebar to fall. If the demand performance continues to exceed expectations, it does not rule out that the price will rise again and maintain a strong oscillation of rebar as a whole.