Hefei Construction Steel Market Prices "Break Through Strongly", Decoding the "Leading" Power Source

1. Price Review of Construction Steel in National and Hefei Markets from the Beginning of 2025 to Present
Recently, the fundamental contradictions in the national rebar market have not been prominent, and prices have been mostly influenced by macroeconomic news and the cost side. In terms of macroeconomic news, with the "anti-rat race" competition details and the expectations of the Political Bureau meeting at the end of July not yet dashed, and the initiation of the Motuo hydropower station project with an investment of trillion yuan, market sentiment has remained high. On the raw material side, favorable news such as the reported production restrictions of 30-50% in the coking industry in the Wuhai region and the requirement for coal mines exceeding production capacity to halt production for rectification has driven the futures market of coking coal and coke to hit the daily price limit, and the second round of coke spot price increases has been implemented. Overall, multiple favorable factors have combined to drive spot prices up to varying degrees across the country.
In the past two weeks, the price increase in the Hefei market, Anhui Province, has been significantly stronger than the national average. As of July 22, the mainstream price in the Hefei market was 3,350 yuan/mt, up 300 yuan/mt from the beginning of the month, while the nationwide average price was 3,314 yuan/mt, up 251 yuan/mt from the beginning of the month. Since July, the price difference between Hefei and the nationwide average has widened significantly, from -13.2 yuan/mt to 35.6 yuan/mt.

2. Reasons Behind the Strong Price Increase of Construction Steel in the Hefei Market
According to the SMM survey, another reason for the strong price increase in the mainstream market in Hefei recently is the lack of mainstream brand resources. The direct supply ratio of local mainstream steel mills exceeds 80%, and the volume of purchases by agents is less than 50% of the previous period. Coupled with the low level of market inventory and fewer retail resources, the market has recently started a pre-sale model. Mainstream steel mills are reluctant to sell and are refusing to budge on prices, and other brands have followed the price increases of mainstream steel mills to a certain extent.
It is reported that the state is vigorously developing the inland river economy in the Yangtze River Basin, with multiple highway, high-speed rail, and other infrastructure projects under construction in Anhui Province, driving local demand for construction steel. Steel mills within the province are still actively exploring the end-use market, and at the same time, the resource allocation of Henan brands in the Anhui market has also increased.

3. Short-Term Price Trend Forecast for Construction Steel
Looking ahead, considering the long construction cycle, the shortage of mainstream brand resources in the Hefei market is likely to persist, and market prices will remain strong. However, the direction of price changes will most likely follow the national price trend. Currently, there are frequent macro tailwinds, and the market remains optimistic about the upcoming Political Bureau meeting, with no decrease in speculative enthusiasm. In the short term, strong sentiment will continue to guide the price trend of construction steel futures and spot markets. However, looking at the fundamentals, on the supply side, blast furnace steel mills have considerable profit margins, and the pace of production has not changed much. Most EAF steel mills have seen continuous improvement in their profitability, with manufacturers in east China and south China resuming production. As a result, the overall operating rate has increased, and supply pressure still exists. On the demand side, persistent high temperatures in inland areas and heavy rainfall in coastal regions have led to generally average transaction performance, with the characteristics of weak demand during the off-season being evident. Overall, the subsequent supply and demand performance may indicate stable supply and weak demand, with construction steel inventory continuing to accumulate. The fundamentals will struggle to provide strong support for prices, and there is still a need to be cautious about the risk of a significant price drop following a pullback in sentiment.