Experts predict that the demand for rebar is still resilient in the context of economic recovery

Since July, the rebar futures market has experienced a wave of volatility and the price of the main contract in 2010 once hit a new high of 3,816 yuan/ton. Unlike the situation in April-June where futures prices are driven by real demand, this round of rebound is more based on expectations of macroeconomic aspects and peak season demand.

On the one hand, this round of rebar has rebounded simultaneously with domestic stock markets and non-ferrous metals and other commodities. On the other hand, during this round of rebound, the increase in rebar spot prices has significantly lagged behind futures. As of the end of July, the main contract has seen a small premium spot for 3 consecutive trading days. Regarding the later trend, the author believes that in the short term, there is an adjustment risk caused by the expected difference; in the medium term, the upward trend should not change.

Short-term adjustment risk of rebar prices still exists

Although there are already plums in East China, some southern provinces are still affected by floods and will be affected by high temperature weather after the rainy season. In July, the national construction steel transaction volume was 21,200 tons, a month-on-month decrease of 3,300 tons; the operating rate of cement mills has declined for six consecutive weeks since June, and started to rebound slightly in late July. The latest data is 60.49%, compared with the end of June. A decline of 0.14 percentage points. These data show that the current demand in the construction industry is still weak.

On the supply side, since the steel mills still have a certain profit, the supply may remain high in the short term. Last week (July 27-31), the blast furnace capacity utilization rate rebounded by 1.43 percentage points to 94.5% on a week-on-week basis, and the average daily molten iron output rebounded by 38,000 tons to 2.5155 million tons on a week-on-week basis. In addition, the recent inflow of overseas resources is also a major factor affecting the supply of steel. In June, domestic billet imports were 2.484 million tons, an increase of 2237.4% year-on-year. From the current level of domestic and foreign billet prices, there is still momentum for subsequent overseas resources to flow in. These billet resources will gradually be converted into finished steel, thereby increasing the short-term Market supply pressure.

In terms of short-flow processes, since July, the prices of short-flow steel mills have been hovering near the break-even line, and some regions are already at a loss, and there is little room for supply growth. Last week, the operating rate and capacity utilization rate of 71 household appliance furnace enterprises nationwide were 72.66% and 58.54%, respectively, down 1.78 and 4.68 percentage points from the end of June.

On the whole, since July, rebar futures have rebounded more due to the impact of the macroeconomic outlook and the expectation of better demand in the peak season, and the current fundamentals are relatively weak. Regarding the later trend, from the mid-term perspective, as the "strong infrastructure + stable real estate" is expected to be further strengthened in the second half of the year, and the supply of rebar has reached the staged peak, the upward trend of rebar prices will not change in the second half. However, in the short term, the adjustment risks caused by the expected difference still exist: one is due to the high level of superimposed supply under the influence of the rainy season, high temperature and floods, and the short-term increase in construction steel inventory continues; the other is the current main force The contract price has fulfilled the expected increase in demand. If it is to continue to rise in the later period, the actual demand recovery is needed to cooperate. Once the actual demand recovery situation is different from the expected, the price will be adjusted periodically.