After a volatile period at the end of June, the rebar market experienced a sideways movement in July. As of July 19, the rebar index had climbed approximately 4% since the start of the month, signaling a potential shift in sentiment.
The recent rise in Shanghai Steel prices is seen as a result of both fundamental improvements and favorable technical indicators. On the fundamental side, steel mills have started to cut production, and demand during the off-season has been stronger than in previous years. Additionally, after a four-month decline, the price of steel hit a bottom in June, creating conditions for a technical rebound. While macroeconomic growth remains sluggish, there are positive signs in railway and real estate investments. With steel mills reducing output and end-users beginning to hedge their positions, the rebar market has found a more stable footing.
Looking ahead, the economy is expected to maintain low but stable growth. Although investment has become a key driver of GDP growth, with a contribution rate of 53.9%, industrial recovery has been slow. The June PMI figures—50.1 for mid-cap and 48.2 for HSBC—highlight the uneven recovery. The government continues to focus on structural adjustments rather than a return to old-style high-speed growth. With a 7.6% growth rate in the first half of the year, it's clear that the government isn't pushing for a rapid rebound, and the economy is likely to remain in a low-growth phase.
Steel mills have been cutting production due to shrinking profits and seasonal factors. In June, daily crude steel output fell by 2.4% from its February peak, and by early July, the average daily steel output dropped further to 2.083 million tons. While some industry observers question the accuracy of production data, historical trends suggest that third-quarter output will be significantly lower than in the second quarter. Combined with environmental regulations in Hebei and weak profitability, the data appears reliable. This reduction in supply could help alleviate the oversupply issue in the domestic market.
Meanwhile, inventory levels have shifted. Traders have reduced purchasing due to poor profit margins, leading to a decline in social inventories since March. However, steel plant inventories remain high, with total social steel stocks reaching 161.465 million tons and key steel enterprises holding 12.7524 million tons. Despite this, regional spot prices have risen, suggesting that inventory has shifted from traders to steel plants, and downstream demand is tighter than expected. With a steady rebound in spot prices since June, along with strong real estate starts and infrastructure data, it’s clear that demand is not in a traditional off-season. This has led to increased terminal purchases, causing localized price spikes that are expected to continue through July.
Housing and railway investments are also playing a role in boosting steel demand. Although housing investment growth slowed slightly in June, new home starts rose to 3.8%, showing improved activity. With better sales performance and continued support from shadow banks, housing developers still have access to ample capital. Additionally, the land purchase boom last year has provided developers with reserves, and as commercial housing investment increases in the second half of the year, a significant portion will go toward construction, further stimulating steel consumption.
While large-scale stimulus plans are unlikely in the near term, there are bright spots in infrastructure. The long-anticipated railway investment plan has been approved by the State Council, and local governments are eager to push forward intercity rail projects, which could trigger a new wave of construction activity.
In summary, long-term bulls should consider maintaining their positions around the 10-day moving average, while looking for short-term buying opportunities during pullbacks.Garden lights are outdoor lighting fixtures that are specifically designed to illuminate gardens, pathways, and other outdoor spaces. They come in a variety of styles and designs, including post lights, spotlights, wall-mounted lights, and hanging lanterns. Garden lights can be powered by electricity or solar energy, and they typically feature energy-efficient LED bulbs. They are an essential element of outdoor decor, providing both functional illumination and aesthetic appeal. Garden lights can be used to highlight specific features of a garden, create a warm and welcoming atmosphere, and enhance the overall beauty of an outdoor space.
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