Rebar Has Strong Demand For Toughness According to the data, as of November 23, the price of rebar HRB400 20mm in Shanghai increased 130 yuan to 4260 yuan/ton compared with the previous week, an increase of above 3%.The main contract price of Rebar futures rose 59-3911 yuan/ton, up about 2%, and the basis widened. The apparent consumption of rebar fell as scheduled last week to 4.316,500 tons, while the main contract reached new highs repeatedly, closing at 3,977 yuan/ton on November 20, and broke through 4000 yuan/ton in the trading day and night, recording the highest level of 4,005 yuan/ton this year. However, about 130,000 lots of positions were reduced in the main contract at the opening of trading on Monday, resulting in an outflow of about 1.803 billion yuan. The price fell sharply and finally closed at 3911 yuan/ton

Supply: last week, the rebar output fell 1% month-on-month to 3.5998 million tons, up 0.8% from a year earlier. It is understood that the drop in output is due to environmental restrictions. The operating rate: as of November 20, the operating rate of of 163 steel blast furnace was 67.27%, slight down month-on-month. However, with the lifting of heavy pollution weather emergency response in some areas, the operation rate and capacity utilization rate of the blast furnace are expected to pick up next week. In terms of profit, with the continuous rise in the price of finished materials, the average spot profit of East China long flow rebar is about 500 yuan/ton on the 5th day, up 22 yuan from the previous month. The average daily spot profit of north China Rolling mill is about 120 yuan/ton, up 28 yuan from the previous month. The average daily average profit of Short process in East China is about 220 yuan/ton, up 133 yuan month-on-month. In terms of the price difference between varieties, the price difference between screws and threads in Shanghai and that between wires and threads did not continue to expand last week. Moreover, according to the newly announced order quantity of building materials in late November, the discount quantity of rebar production was significantly reduced compared with the previous period. As a result, rebar production is expected to increase next week.

Demand:  last week, the apparent consumption of rebar fell 7.1% month-on-month to 4.316 million tons, up 8.1% year on year. Affected by the rain and snow in northern China, the average daily turnover of building materials in China was 227,200 tons last week, up 0.7% month on month. Expectations of lower demand have been building since the second half of the year, when demand peaked at 4.647,800 tonnes, and apparent consumption of more than 4.3 millions tonnes last week was higher than in the past four years. So, objectively speaking, the apparent consumption last week was not bad, and demand resilience is expected to remain in place until the end of November.

Output:, last week, the total rebar inventories fell 9%month-on-month to 7.926,600 tonnes , down 11.3% from the previous week and down 3.5% from a year earlier. Specifically, the factory inventory declined 5.7% month-on-month, and the social inventory declined 10.6% month-on-month. The factory inventory decline contracted sharply compared with the previous week, but the social inventory decline basically maintained at the same decline level, indicating that the downstream rigid demand was better. Therefore, at current inventory levels, even if the pace of future inventory reduction slows slightly, the total inventory could fall below market expectations by the end of the year, and market sentiment is not pessimistic.

To sum up, rebar spot prices continue to rise, and the main contract of the basis of more than 340yuan/ton. With the gradual relaxation of the environmental protection limit and the high profit of rebar, the output of rebar is expected to pick up. In addition, as the weather in the north gradually turns cold, the construction progress of key projects will be affected to some extent. Whether the missing demand in the north can be made up by the south remains to be verified. Rebar prices have risen too quickly recently, raising fears of high sentiment in the market, and Monday’s sharp drop helped to release risk. But overall, in the absence of a significant drop in demand, rebar prices will still oscillate upward.