Weak Demand and Falling Costs Create Dual Pressure, Rebar Market Operates Weakly

Core Conflict: Property Downturn Leading to Demand Contraction is the Main Cause

The core reason for this round of price declines is a significant contraction in end-user demand. Despite entering the traditional peak construction season "Golden September and Silver October," the number of new real estate construction projects remains low, and progress on ongoing projects has generally slowed due to issues like funding. This has resulted in actual procurement demand for construction Rebar, such as (threaded steel) and Wire Rod, falling far short of levels seen in previous years. While infrastructure construction provides some underlying support, its volume is (difficult to) fully compensate for the huge gap left by the real estate sector.

Supply and Cost: Mill Production Cuts and Falling Raw Material Prices

In response to weak demand, some steel mills have been forced to adopt measures like blast-furnace maintenance and reducing scrap steel addition ratios in converters to control supply. However, the overall pace of destocking in social inventories remains slow. Simultaneously, prices of key steelmaking raw materials—iron ore and coking coal—have also declined to varying degrees, weakening cost support. While the loosening cost side has temporarily alleviated loss pressures for some mills, it has also created room for further Rebar price declines. The market's "negative feedback" loop (weak demand -> falling prices -> lower costs -> further price drops) continues.

Market Sentiment and Capital: Traders Destock, Capital is Cautious

Market participant sentiment is generally pessimistic. Traders are primarily focused on actively shipping goods and reducing inventories, with speculative demand(almost) nonexistent. Downstream construction companies are purchasing based on immediate needs, with extremely low willingness to stockpile. Capital throughout the industrial chain has become cautious, reducing hoarding and investment operations targeting steel, which further exacerbates the lack of market liquidity and downward price pressure.

Future Outlook: Policy Effects Await Observation, Market Stabilization Needs Time

The market is pinning hopes on subsequent, more forceful macroeconomic stimulus policies, particularly whether a "package" of policies aimed at the real estate market can be truly implemented and effectively boost market confidence. However, it takes time for policies to transmit to (physical) demand. Most analysts believe that without seeing substantial improvement in demand, the rebar market will likely continue its pattern of weak supply and demand, with prices mainly oscillating at low levels and lacking rebound momentum. The process of industry consolidation and survival of the fittest is expected to accelerate.

Market participants are advised to closely monitor real estate policy (movements), the intensity of substantial production cuts by mills, and changes in raw material prices, prioritizing cash flow security and operating cautiously.