Steel prices are expected to remain weak in the near term, continuing a trend of gradual declines observed in previous periods. The domestic steel market has seen ongoing downward pressure, with both steel and billet prices falling consistently. This has led to sluggish transaction volumes, as traders have maintained stable pricing, particularly for medium- and small-sized products. As of September 30, the price of HRB400 20mm rebar in the Shanghai market stood at 3,440 yuan per ton, marking a drop of around 90 yuan per ton from the start of September.
Steel mills have also been adjusting their factory prices in response to market conditions. In September, some major producers like Yindie saw increased price volatility, with ex-factory prices generally declining. Shagang and Yonggang, among others, initially kept their rebar and wire rod prices steady in early September. However, by mid-month, these prices were reduced by 30 yuan per ton, with contract replenishment amounts ranging between 30–60 yuan per ton. By late September, the reductions became more significant, with Dagang, Shagang, and Yonggang lowering their rebar and wire rod prices by 50–80 yuan per ton. The latest ex-factory price for HRB400 20mm rebar at Shagang is now 3,580 yuan per ton, while the Shanghai market price is approximately 130–150 yuan lower.
Despite the pricing power held by steel plants, they have had to follow market trends in response to weak demand. This reflects the broader challenges faced by the industry amid ongoing supply pressures.
In terms of production, steel mills have maintained high output levels, though some have started to reduce intensity. In August, the average daily crude steel output in China reached 2.3181 million tons, up 1.24% compared to the previous period, ending a three-month decline. According to the China Iron and Steel Association, the average daily crude steel output in September and mid-September was estimated at 21.294 million and 21.435 million tons, respectively, showing increases of 0.48% and 0.66%. Overall, steel production remains strong, but there are signs of slight adjustments in output. It is estimated that crude steel production this year will reach between 770 and 780 million tons, representing an 8% increase from the same period last year. This continued high supply is expected to put further pressure on the market.
Inventory levels have shown mixed trends. As of September 27, social inventories of rebar and wire rods were 5.9803 million and 1.907 million tons, respectively, down 45% and 58% from their yearly highs in March. These levels are roughly flat compared to the same period last year, although weekly declines have narrowed significantly. By mid-September, inventory levels at key steel companies stood at 13.22 million tons, and by the end of the month, they had risen slightly by 5.0%. After six months of destocking, steel stocks only began to rise again during the traditional peak demand season, indicating weaker-than-expected consumption and diminished market confidence.
Downstream demand has grown steadily, but it still lags behind supply growth. According to the National Bureau of Statistics, real estate development investment in August reached 781.8 billion yuan, up 13.09% year-on-year and 4.61% from the previous month. While sales area growth remained positive at 10.06% year-on-year and 0.09% quarter-on-quarter, other indicators declined. Newly started and construction areas saw year-on-year drops of 20.14% and 24.82%, respectively—both hitting annual lows. From January to August, cumulative real estate development investment grew by 19.3% year-on-year, dipping below 20% for the first time this year. In August, the national real estate development climate index stood at 97.29, down 0.1 points from the previous month. Funds invested in real estate development totaled 769.6 billion yuan from January to August, growing by 28.9% year-on-year, a decrease of 2.6 percentage points from the previous month.
Looking ahead, real estate risks are expected to remain limited, but investment growth is likely to slow. With new housing inventory currently at around 11 months—slightly below historical averages—the upcoming "Golden September" and "Silver October" may bring improved sales performance. The low start of new construction projects suggests that supply will remain constrained, and inventory is expected to continue decreasing.
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