Demand continues to improve
After the Spring FestivalRebarPrices first fell and then rose. The drop in prices in early February was mainly due to lower expectations. The overall speed of resumption of work and production after the Spring Festival was slightly lower than market expectations, and the market turned from optimism to neutrality. Since mid-February, as the speed of resumption of work accelerated, the demand for rebar tables rebounded, and prices gradually stabilized and rebounded.
At present, the fundamentals of rebar are still developing in an optimistic direction, and the cost continues to rise. On the supply side, lower steel mill profits limit the release of short-term production. The demand side is gradually improving seasonally, and prices are expected to maintain an upward trend.
relatively firm cost
February,iron orestone, scrap steel,cokePrices have risen to varying degrees. The price of PB powder has risen by 27 yuan/ton to 917 yuan/ton, the price of scrap steel in East China has risen by 90 yuan/ton to 2,860 yuan/ton, and the first round of 100-110 yuan/ton of coke has also been raised. It has started to land, and it is expected that there will be 1-2 rounds of increase. The main reasons supporting the rise in raw material prices are: firstly, the supply itself is low, the shipment of iron ore is at a seasonally low level, and it is still difficult to collect scrap in scrap processing bases.coking coalSupply has also been affected by safety inspections, which has affected coke production; second, demand is gradually picking up, with the average daily output of molten iron rising from 2.2 million tons to 2.34 million tons, and it is expected to reach more than 2.4 million tons in March. In terms of sex, there is also room for recovery. Therefore, as far as the cost of rebar is concerned, unless the demand for steel has fallen sharply, resulting in a forced reduction in steel production, the cost will be relatively strong under the background of low raw material supply and rising demand. At present, the static cost of rebar in long-process steel mills is around 4,100 yuan/ton, and the flat electricity cost of electric furnace steel is generally above 4,150 yuan/ton.
Supply is slowly picking up
In the past two years, the influence of the steel supply side on the market has increased, mainly due to the poor demand for rebar in general, and steel mills have been forced to adjust supply to curb price declines. At present, the output of rebar is in the process of slowly rising. In the short term, due to the higher price of raw materials, its profit has been at a relatively low level, so the pressure on supply is not great. As of February 23, the weekly rebar The output is 2.8217 million tons, which is only higher than that during the 2020 epidemic in the past five years. In addition, environmental protection and production restrictions still need to be considered. In late February, the Ministry of Ecology and Environment went to many places to supervise and inspect the environmental protection problems of enterprises. Tangshan started the second-level emergency response to heavily polluted weather on February 25. It is not ruled out that further production restriction policies will be introduced later. Thereby further limiting the yield release.
Demand is expected to be good
The current data on the demand side is still relatively optimistic, and there are still good expectations. Judging from the weekly apparent data, rebar has reached 2.9368 million tons. Although this data is only slightly better than that in 2022, considering the current real estate situation, it is already at a relatively good level. The daily transaction volume of construction steel Also reached more than 160,000 tons. At the same time, from the perspective of seasonality, there will be room for the table demand to continue to rise until mid-March, and it is expected to see more than 3.3 million tons of table demand in the later period.
However, the short-term real estate drag on the demand for rebar is still there, but the back-end sales have begun to improve. At present, the sales data of new houses in 30 large and medium-sized cities has surpassed that of last year, and the sales of second-hand houses are better, basically reaching the level of 2019. If the current momentum can be continued, this year’s sales are expected to turn positive year-on-year, which will also provide support for front-end real estate companies to acquire land and start new construction. In addition, infrastructure will continue to support the demand for rebar. From the data in the fourth quarter of 2022, it can be seen that although the area of new real estate construction has dropped by more than 40% year-on-year, the decline in rebar demand is only about 15%. In January, China’s new infrastructure construction loans were 1.5 trillion yuan, an increase of 447.9 billion yuan year-on-year. The economy is still facing great pressure and needs support from infrastructure.
The high-frequency data reflecting the demand is also improving, and the resumption of production and work of enterprises has been significantly accelerated. According to the data of institutional research, as of February 21, the resumption rate of 12,220 engineering projects across the country was 86.1%, an increase of 5.7 percentage points year-on-year in the lunar calendar. The operating rate and price of cement are also picking up. As of February 23, the operating rate of cement mills nationwide reached 44.07%, which is higher than the same period in recent years in absolute terms. Therefore, the trend of overall demand recovery continues, and the next demand can still be viewed with optimism.
To sum up, at present, for rebar, the cost support is still strong, and the fundamentals of supply and demand are developing in a good direction. The release of output is slow under low profits, and the demand continues to improve. It is expected that the price will still maintain an upward trend. (Source: Futures Daily Author Unit: Soochow Futures)
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