After the volatility seen at the end of June, the rebar market remained in a sideways trend during July. As of July 19, the rebar index had climbed roughly 4% from its starting point for the month. This modest but steady increase has sparked renewed interest among investors and traders alike.
The recent rise in Shanghai Steel prices appears to be driven by a combination of improving fundamentals and technical factors. On the supply side, steel mills have started to reduce output in response to weak margins, while demand during the traditionally slow season has been stronger than expected. Additionally, after four months of declines, the technical indicators are now showing signs of a potential rebound, especially following the bottoming out in June. Although macroeconomic conditions remain weak, there are positive developments in both railway and real estate investments, which are supporting steel demand. With production cuts already underway and hedging demand from end-users picking up, the rebar market is showing more stability.
Looking ahead, the economy is likely to maintain a low growth trajectory. While investment has played a key role in driving GDP growth with a 53.9% contribution rate, industrial recovery remains sluggish. The mid-cap PMI and HSBC PMI for June stood at 50.1 and 48.2 respectively, signaling mixed performance across sectors. The government’s focus on structural adjustments rather than a return to previous high-speed growth models suggests that economic expansion will remain moderate.
Steel mills are beginning to cut production due to both profit pressures and seasonal demand patterns. In the first half of the year, domestic steel producers continued to face declining profitability, leading to reduced output. According to National Bureau of Statistics data, daily crude steel production fell by 2.4% in June compared to February's peak, reaching 2.155 million tons. Meanwhile, the China Iron and Steel Association reported that average daily steel output in early July dropped to 2.083 million tons, down nearly 100,000 tons from the previous period. These trends indicate that production cuts are becoming more pronounced. Despite some industry concerns about underreporting, historical production patterns suggest that third-quarter output will likely be lower than in the second quarter. Combined with environmental regulations in Hebei and ongoing profit challenges, the reliability of these statistics seems reasonable. This reduction in supply could help ease the current oversupply situation in the domestic market.
As for inventory levels, traders have been hesitant to buy due to thin 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 as of early July, and key steel enterprises still holding 12.7524 million tons. High inventory levels continue to put downward pressure on prices. Yet, despite this, spot steel prices have risen in various regions, suggesting a shift in inventory ownership from traders to steel plants. This shift, along with improved downstream demand, has led to a noticeable rebound in regional steel prices. With stable price increases since June, coupled with rising real estate starts and infrastructure investment data, it’s clear that demand is not in a traditional off-season. This has encouraged increased terminal purchases, particularly in certain areas, and this trend is expected to continue through July.
Housing and railway investments are also contributing to increased steel consumption. While the year-on-year growth in housing investment slightly declined in June to 20.6%, new housing starts rose to 3.8% from the previous month. This indicates a strengthening in housing activity, which will drive long-term steel demand. Improved sales and support from shadow banks have kept capital sources for developers at 32.1% year-on-year. Moreover, government efforts to expand funding channels for housing companies and the land purchase boom from last September have given developers ample resources. As commercial housing investment picks up in the second half of the year, a significant portion will go toward construction and development, further boosting steel demand.
Although policy adjustments have taken place, a large-scale stimulus package is unlikely in the near term. However, there are bright spots in infrastructure, particularly in railway investment. A long-anticipated railway program has received preliminary approval from the State Council, and local governments are eager to push forward intercity rail projects to stimulate economic growth. This could lead to a new wave of construction activity in the coming months.
In summary, the rebar market shows signs of improvement, supported by fundamental changes and technical rebounds. Long-term bulls are advised to hold their positions above the 10-day moving average, and to consider buying on short-term dips for better entry points.Solar flood lights are outdoor lighting fixtures that are powered by solar panels, making them energy-efficient and environmentally friendly. They are designed to provide bright, long-lasting illumination for a wide range of outdoor spaces, including street light ,outdoor,lights,gardens, driveways, patios, and parking lots. Some of the key performance and advantages of solar flood lights include:
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