Off-Peak Season Characteristics Emerge, Deceleration of High-Price Areas in Construction Steel Accelerates

Entering June, influenced by weak demand and falling raw material prices, the price of construction steel has been on a downward trend. Especially since the latter half of the month, the rate of price decline has noticeably accelerated. Recently, there have been expectations of interest rate cuts and steel mill production cuts in the market. Do these policies and news provide certain support to the market? Can the price reach the bottom and rebound? Let's analyze the current market situation.

Continuous Price Decline

As of June 24th, according to Mysteel data, the national average price of rebar is 3,632 yuan/ton, a decrease of 258 yuan/ton from the previous month. In Beijing, Tianjin, Shijiazhuang, and other places, the price has fallen by 190 yuan/ton, 220 yuan/ton, and 240 yuan/ton respectively, with a decline lower than the national average. In early June, the national average price fell by about 130 yuan/ton, with a decrease of only 50 yuan/ton in Beijing and other places, and the decline has accelerated in recent days.

Inventory Accumulation Speed Slows Down

As of last week, the rate of inventory accumulation in the construction steel market led by Beijing-Tianjin-Hebei has slowed down, with an increase of only 4% compared to the previous week. The supply and demand are both weak, and the off-peak season characteristics are obvious.

Capacity Utilization Rate at a High Level This Year

In June, the capacity utilization rate of rebar in Beijing-Tianjin-Hebei showed a relatively stable trend, with a small change range. As of last weekend, the capacity utilization rate of construction steel enterprises in Beijing-Tianjin-Hebei increased by 4% month-on-month, 16% lower than the same period last year. Although the current steel mill profit level is low, there is no clear plan for maintenance and production reduction. As the price further declines, the output in the Beijing-Tianjin-Hebei region may decrease, but the range will not be too large. It is expected that the output will still be maintained at the current level in the short term.

Accelerating Decline in High-Price Areas

Over the years, the price in the north has always been a lowland of national prices. At the beginning of this year, the price in the north continued to be low. Entering the "Golden March and Silver April" period, the demand in the north was released, and the steel mill production was low, with the market inventory being quickly reduced, supporting the high price. After May, the price has been higher than that in East China and South China. Especially since the middle and late May and June, the South China region has entered the rainy season, with even weaker demand, further expanding the price difference between the north and the south, and some southern materials have moved northward.

Recently, with the recovery of the local steel mill capacity utilization rate, the increase in steel mill resource allocation, coupled with some arrivals from peripheral areas, the local resource supply has increased, while demand remains weak. Under the trend of falling prices, the willingness to support prices in the northern market is low, and the price decline in recent days has been significantly faster than other regions, and the regional price difference has narrowed.

Overall, there are currently macro-level news of interest rate cuts and reserve requirement ratio reductions, as well as expectations of steel mill production cuts, but their stimulating impact on the market has not yet been reflected. The current impact is more on the supply and demand relationship. The real estate and infrastructure are still weak, and it is in an active off-peak season, with demand difficult to improve in the short term. On the supply side, there is no obvious reduction at present. Therefore, it is expected that the market will continue to operate weakly in the near future, and the decline in the high-price areas of the north will be faster, and the price difference between the north and the south will further narrow.