Although rebar spot prices have stabilized recently, the overall outlook in the industry continues to be shaped by weak fundamentals and low demand.
Rebar spot prices have stabilized after nearly a month of decline. Major contract prices have increased by over 100 yuan/tonne (USD 13) since the lows, and the market is showing signs of recovery. However, this recovery trend has been limited due to the lack of improvement in the supply and demand pattern and is finding it difficult to support steel prices.
Factors ensuring the stability of steel prices include optimism in macroeconomic policy expectations and increasing cost support. Positive developments in domestic macroeconomic policy expectations and increases in costs contribute to the gradual recovery of steel prices from low levels. However, global economic weakness and general declines in non-ferrous metals negatively affect the prices of steel raw materials, especially iron ore.
With the approach of the Third Plenary Session of the Communist Party of China Central Committee, optimism in domestic policy prospects is increasing, providing some support to steel prices. However, demand for steel products such as rebar remains weak and stocks in the market are increasing again. Manufacturers maintain a relatively active production process, which increases supply pressure during the off-season.
While rebar production has increased significantly in recent weeks, the stock-to-consumption ratio is still at high levels. This situation stands out as an important factor that puts pressure on the future course of steel prices. In particular, high inventories and weak demand are tightening steel producers' profit margins and increasing uncertainty in the market.
In summary, China's rebar market continues to follow an unstable course due to weak demand and increasing supply during the off-season period. In addition to macroeconomic factors, fluctuations in raw material prices will continue to be decisive in the market. The future of rebar prices seems to be shaped depending on whether there will be an improvement on the demand side.
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