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Possible growth in rebar prices for October?
2024-09-27 09:34:04
Since late May, rebar futures prices have been on a downward trend that has yet to converge.
2024 On 6 September, the closing price of the main rebar futures contract fell to its lowest point since the beginning of the year, before bottoming out.
Unfortunately, after just over a week of recovery, prices turned down again on 20 September. Currently, rebar futures prices have fallen back to lower levels since the beginning of the year.
Rebar futures prices
Bottomed out and then fell back
On 6 September 2024, rebar futures prices bottomed out (main contract closed at RMB 3,051/tonne, with a low of below RMB 3,000/tonne to RMB 2,988/tonne on 9 September), after which prices started to rebound, peaking at the end of mid-September (closing at RMB 3,206/tonne on 19 September, with a high of RMB 3,237/tonne on 20 September). Within two weeks, prices recovered by about RMB 200/tonne.
However, under the general downtrend, the price was incapable of continuing to surge higher. According to the monitoring, on 20 September, rebar futures prices quickly turned around and slid down, with the main contract closing back at RMB 3,165 per tonne.
At the opening of this Monday (23 September), rebar futures prices fell further rapidly. As of 15:00 on 23 September, the closing, highest and lowest prices of the main rebar futures contract (RB2501) were RMB 3,087/tonne, RMB 3,167/tonne and RMB 3,084/tonne respectively. The closing price was 107 yuan per tonne lower than the settlement price of the previous trading day, a daily drop of up to 3.35%.
Just two trading days will rebar futures nearly two weeks of price rebound depletion. This means that the current price rebound is not the time, and a real price reversal is not yet in place.
Fluctuation is relatively small
The fluctuation of rebar spot price is relatively small, the daily decline is mostly around 30 RMB/tonne, and the price change in some areas is not very obvious. Compared with the large fluctuations in the price of the main rebar contract, the spot price of rebar is more ‘resistant’. This is mainly because the current decline in steel prices is more caused by the lack of macro-confidence, and market fundamentals have little to do.
Data from China Statistical Information Service Centre showed that in the first half of September 2024, the average price of rebar (20 mm diameter, HRB400E) was RMB 3,154.9 per tonne, down RMB 28.1 per tonne compared with that in the second half of August, with a week-on-week decrease of 0.9 percentage points.
According to the monitoring of relevant institutions, on 20 September 2024, the average price of 25mm diameter Grade III rebar in 10 key domestic cities was RMB 3,376/tonne, up RMB 66/tonne week-on-week, or 1.99% week-on-week.
On 23rd September, the average price of 25mm diameter grade III rebar in 10 key domestic cities was RMB 3344/tonne, down RMB 26/tonne from the previous trading day's price, with a daily drop of 0.77%.
At present, the market has more low-priced resources, and the actual turnover is low. After the Fed's interest rate cut, the market is actively shipping, steel companies are more willing to support prices.
Real estate still a drag on steel demand
Data released by the National Bureau of Statistics (NBS) showed that in January-August 2024, the country's fixed asset investment (excluding farm households) grew by 3.4 per cent year-on-year. in August, the country's fixed asset investment (excluding farm households) grew by 0.16 per cent year-on-year.
From January to August, investment in real estate development nationwide fell by 10.2% year-on-year; the area of housing construction by real estate development enterprises fell by 12.0% year-on-year; the area of new housing construction fell by 22.5% year-on-year, and the area of housing completed fell by 23.6% year-on-year; the area of new commercial property sales fell by 18.0% year-on-year, and the sales of new commercial property fell by 23.6% year-on-year. The sales area of newly-built commercial properties fell by 18.0% year-on-year, and sales of newly-built commercial properties fell by 23.6% year-on-year. During the same period, the funds in place of national real estate development enterprises fell by 20.2% year-on-year.
Among them, self-financing (35.96%) declined by 8.4% year-on-year, deposits and advance receipts (30.14%) declined by 30.2% year-on-year, domestic loans (14.63%) declined by 5.1% year-on-year, and personal mortgage loans (14.19%) declined by 35.8% year-on-year.At the end of August, the area of commercial property for sale was up 13.9 per cent year-on-year (of which, the area of residential property for sale was up 21.5 per cent year-on-year).
Since April 2024, the National Real Estate Development Prosperity Index (NRDPI) has risen month-on-month. in August, the index reached 92.35. this suggests that, despite the overall downturn in the industry, the property market is gradually picking up in the summer and autumn seasons.
In August, the value-added of the nation's above-scale industry grew by 4.5 per cent year-on-year in real terms. However, during the same period, the value added of the ferrous metal smelting and rolling processing industry decreased by 2.1 per cent year-on-year; crude steel output fell by 10.4 per cent year-on-year; and rebar output dropped by 32.3 per cent year-on-year, with the rate of decline further expanding by 10.7 percentage points year-on-year.During the period of January to August, the value added of the nation's industry above designated size increased by 5.8 per cent year-on-year. However, crude steel production in the same period fell by 3.3% year-on-year, rebar production fell by 15.7% year-on-year. rebar production in August is the lowest monthly output in the past 12 years, only equivalent to the level of monthly production in 2011; and the cumulative rebar production in January-August is equivalent to the level of rebar production in the same period in 2013. In short, rebar production has fallen back more than a decade.
Policy and Financial Support
Precision Regulation Implementation
The central bank will increase the intensity and improve the precision of monetary policy regulation.2024 On 23 September, the PBoC carried out 160.1 billion yuan of 7-day and 74.5 billion yuan of 14-day reverse repurchase operations at a fixed interest rate and in the form of quantity bidding. On the same day, the National Development and Reform Commission (NDRC) held a special press conference on the overall progress and effectiveness of the ‘two new’ (large-scale equipment renewal and consumer goods trade-in) policy.
The Ministry of Finance will directly arrange 150 billion yuan of ultra-long-term special government bond funds and equipment renewal loan interest subsidy funds to localities in batches, and effectively do a good job of guaranteeing and supervising the funds.
Traditional peak season under pressure
Price operation oscillation ups and downs
Currently in the traditional peak demand season, with the arrival of the National Day holiday, the terminal replenishment demand increased significantly. Rebar supply is also decreasing sharply, spot inventory continues to fall, the pressure is reduced, and some areas have already seen a shortage of spot specifications. Meanwhile, the support of upstream raw material costs for steel prices has also increased. As a result, the price of rebar has been substantially supported and has some upward momentum.
However, we must see that the adverse impact of changes in the external environment is increasing, the domestic effective demand is still insufficient, the economy continues to rebound to good still face many difficulties and challenges. economic performance in August is not satisfactory, the real estate data is worrying. Superimposed on the UBS, JP Morgan and many other overseas institutions have downgraded the forecast of China's economic growth, making the market pessimism spread.
To sum up, I believe that before the National Day rebar prices rise hope is not too big, but after the long holiday, hope breeding, rebar futures prices may wait for the opportunity to rebound, oscillation higher.