2023, the actual funds in place of real estate development enterprises were still lower than same period last year, and the shortage of funds in the industry had not improved significantly. As a result, the enthusiasm of real estate enterprises to carry out investment and development business was weak, the year-on-year decline in domestic real estate development investment continued to widen, the new construction area in January-May decreased by 22.6% compared with the same period last year, and the demand for real estate rebar decreased significantly. At the same time, although domestic infrastructure investment can still maintain a growth rate of more than 7%, the actual construction volume is mainly released in March, the increment of new projects in April-June is insufficient, and the demand for purchasing building materials is weak.
Figure 1: Growth rate of domestic real estate and infrastructure investment from January to May in 2018-2023 (%)
Source: Cement Big Data (https://data.ccement.com/)
In the first half of 2023, The peak demand for rebar appeared in mid-March, and began to decline gradually in April. The weekly average apparent demand in May-June was basically maintained at over 3 million tons. Under the background that the recovery of terminal consumption is not as good as expected, the price of threaded steel market has been withdrawn by a large margin, speculative demand has also been restrained, and the volume of transactions has been at a low level for a long time. Therefore, despite the disturbance of the epidemic, the apparent demand for rebar in the second quarter of this year is still almost the same as that in the same period last year (with the impact of closure), and the overall demand is at the lower edge of the operating range in the past eight years, with no significant improvement.
Figure 2: Changes in apparent demand for rebar from 2016 to 2023 (10,000 tons)
Data source: Cement Big Data (https://data.ccement.com/)
The market demand is sluggish, and the profit of rebar production is significantly compressed. In particular, short-process enterprises continue to be in a state of loss. Affected by this, steel mills took the initiative to reduce the production schedule of rebar rolling lines, with an average weekly output of only 2.7 million tons in May-June, a further decline of about 10% compared with the lowest supply in the same period in previous years, to a new low level since 2016.
Figure 3: Average weekly output change of rebar from 2016 to 2023 (10,000 tons)
Data source: Cement Big Data (https://data.ccement.com/)
Through the initiative of steel mills to reduce production, In the case of weak demand in the rebar warehouse, it will not rise but fall. By the end of June, the total inventory of domestic rebar had dropped to 7.23 million tons, which was close to the low range of the same period in previous years. Specifically, the inventory of steel mills is only 1.92 million tons, which is basically the same as the lowest value since 2016; the social inventory is about 5.3 million tons, which is about 1.4 million tons away from the lowest level in previous years. From the perspective of inventory sales ratio, inventory pressure is lower than same period in 2020-2022, higher than same period in 2016-2019, basically in the middle range.
Figure 4: Total rebar inventory changes in 2016-2023 (10,000 tons)
Data source: Cement Big Data (https://data.ccement.com/)
Short-term tight balance will continue. The end of July may usher in an increase in production
. Since 2023, under the background that demand has been running at a low level for a long time, steel mills have achieved continuous destocking by actively reducing production. From May to June, the domestic rebar market entered a state of tight balance at a low level, with no obvious changes in supply and demand, and the average weekly destocking volume remained at over 300,000 tons.
From the supply side, the production of threaded steel and the inventory of steel mills have been at the lowest level in the same period in previous years, the pressure of steel enterprises to go to the warehouse is not great, and the possibility of further production reduction is low. In addition, because the benefit of rebar has not been significantly improved, the enthusiasm of steel mills to substantially increase the production schedule of rebar rolling line is insufficient. Therefore, the supply of rebar will remain at a low level in the short term. On the
demand side, according to the statistics of China Cement Network Big Data Research Institute, the amount of winning bids for domestic construction projects reached 413.1 billion yuan in June, an increase of nearly 15% compared with May, making it the largest month of winning bids this year. It can be seen that the construction volume of terminal construction projects is expected to increase gradually in the future, and the demand for rebar is unlikely to decline further in the short term. However, affected by weather factors, July-August is still the traditional construction off-season, the average apparent demand for rebar in the same period in previous years is about 3.3 million tons, and the growth space of rebar demand is also limited.
Figure 5: Number of domestic bid-winning projects and bid-winning amount from January to June 2023 (100 million yuan)
Data source: cement big data (https://data.ccement.com/)
. Both ends of the supply and demand of rebar are in the state of "top and bottom", and it is difficult to break the pattern of low tight balance in the short term, and the inventory will continue to decline gradually. According to the data of previous years, the lowest ratio of rebar inventory to sales in July-August is about 1.8. After the inventory drops to a certain extent, there will be a local and temporary gap between supply and demand in the domestic rebar market, which will push steel mills into the stage of active replenishment. According to the current speed of destocking, it will take about 4-6 weeks for the ratio of inventory to sales to drop from about 2.4 at the end of June to around 1.8. This shows that, excluding external interference factors and considering only the fundamentals of supply and demand, rebar stocks are expected to hit the bottom at the end of July and the beginning of August, breaking the existing balance, and steel mills may begin to increase production.
Figure 6: Change
of rebar warehouse-to-sales ratio in 2016-2023 Data source: cement big data (https://data.ccement.com/)
浙公网安备33010802003254号