Rebar prices in major cities saw a general increase after the Spring Festival (February 24 to March 20), with gains ranging from 10 to 50 yuan. Specific prices include: Shaoguan Steel at 3170, up 10; Hangzhou Zhongtian at 3240, up 30; Nanning Liugang at 3240, up 40; Fuzhou Sansteel at 3120, unchanged; Nanjing Nangang at 3180, unchanged; Kunming Kungang at 3130, up 50; Tangshan Tangsteel at 3100, up 40; Nanchang Steel at 3230, up 10. Prices are quoted in yuan per ton.
During the same period, the rebar futures contract 2605 rose by 68 points, a gain of 2.23%. Factors contributing to the weaker spot price performance compared to futures include earlier inventory accumulation by dealers before the year-end and pressure from passive winter stockpiling, leading dealers to prioritize destocking. Additionally, futures market sentiment often shifts more rapidly than the spot market.
As of Thursday, March 20, rebar inventory in Hangzhou stood at 1.495 million tons, with daily outflows of 34,000 tons. Compared to the same lunar period last year, inventory was 1.178 million tons with outflows of 42,000 tons. Inventory levels in the previous two years peaked just above 1.2 million tons, whereas this year it has reached 1.5 million tons directly. While daily outflow data is currently similar to last year's, a lack of improvement in outflow figures could potentially exert downward pressure on prices.
Analysis suggests that due to earlier inventory accumulation last year, Hangzhou's rebar inventory is significantly higher than the levels seen in the past two years. Recent surveys indicate that while dealers for top-tier brands report no significant pressure, those handling third-tier brands, such as Fuxin, show a stronger willingness to reduce inventories, suggesting limited momentum for further price increases.
Nationwide building materials inventory data shows a slight increase in production this week, with both social and mill inventories rising modestly, while apparent demand experienced a minor decline. This week's apparent demand was 4.2652 million tons, approximately 80% of the peak season level.
Most electric arc furnaces are operational, leading to a slight rise in building materials production. Blast furnace steel mills, responding to varying profit margins across products, are leaning towards producing more hot-rolled coil, diverting more molten iron to that product. Production levels are expected to remain largely unchanged next week. As demand continues its gradual recovery, a broadly balanced supply-demand situation may emerge next week.
Economic data for February, released on March 9, showed the National Consumer Price Index (CPI) rose 1.3% year-on-year, marking the highest increase in three years. The Producer Price Index for Industrial Products (PPI) fell 0.9% year-on-year, though the rate of decline narrowed by 0.5 percentage points compared to the previous month.
The significant CPI increase in February is primarily attributed to the timing of the Spring Festival, which fell in February this year versus January last year. Typically, the month containing the holiday sees noticeable consumer price increases, followed by a pullback in the subsequent month. Against the low base from February last year, this year's CPI increase appears pronounced. Price rises for services such as air tickets, vehicle rentals, travel agencies, and hotel accommodation contributed 0.75 percentage points to the CPI increase. The February CPI rise was mainly driven by holiday-related service price increases rather than broad-based inflationary pressures, indicating that underlying weak consumer demand persists. Meanwhile, the narrower decline in PPI, while still indicating a downward trend, combined with signals from the government work report emphasizing continued "prudent monetary policy" and "flexible and efficient use of various policy tools including reserve requirement ratio (RRR) cuts and interest rate reductions," suggests the central bank has room for further easing, with potential RRR cuts and interest rate reductions anticipated.
Data released on March 16 showed new home prices in 70 major cities fell 0.28% month-on-month and 3% year-on-year in February, with the annual decline widening from January's 3.3%. The data indicates no clear signs of stabilization in the property market. With policy support potentially waning, the outlook may weaken further. Although recent upticks in viewings and transactions for second-hand homes in cities like Shanghai and Shenzhen have been noted, these top-tier cities benefit from their economic strength attracting population and purchasing power—an advantage not shared by most other regions. In February, 65 of the 70 cities still saw year-on-year price declines. Official statements have shifted from "making sustained efforts to promote a steady rebound" in the property market last year to "focusing on stabilizing the property market" this year, suggesting the sector's adjustment period is likely to continue.
On March 18, the U.S. Federal Reserve announced it would maintain the federal funds rate target range at 3.5%-3.75%. There are no current signals of a shift from potential rate cuts to hikes; the stance remains one of watchful waiting. Inflation remains the primary concern, with Chair Powell projecting core PCE at 3.0%, still elevated and above the target. Furthermore, U.S. non-farm payrolls fell by 92,000 in February, with the unemployment rate rising to 4.4% from 4.3% in January. This data, significantly below market expectations, marked the first negative reading since October 2025. The weak employment situation makes a Fed rate hike unlikely. Powell noted that Middle East tensions could push inflation higher in the short term, but it is too early to gauge the breadth and duration of potential economic impacts. Therefore, the Middle East situation has not ended the Fed's rate-cut cycle. According to the Fed's dot plot, one rate cut is still anticipated this year, with another in 2027. However, concerns over potential delays in rate cuts have pushed U.S. bond yields higher. Rising U.S. Treasury yields and a stronger U.S. dollar, combined, could exert downward pressure on commodities. Current market focus remains on Middle East tensions; prolonged conflict could sustain market worries and continued pressure on commodities.
From a news perspective, the UK government stated that from July 1, steel import quota levels will be reduced by 60% compared to current arrangements, with tariffs on imports outside quotas rising from 25% to 50%. Following the EU's Carbon Border Adjustment Mechanism (CBAM), the UK's move to increase steel tariffs is negative for steel exporting countries. Looking at rebar futures positioning data, long positions decreased by 45,350 today, while short positions fell by 13,398. Yesterday's data showed long positions down 31,423 and short positions down 35,685. The significant reduction in long positions today might test bullish sentiment. Short-term, rebar futures may experience range-bound, slightly stronger movement.
The medium to long-term outlook remains cautiously bearish. The property market adjustment shows no signs of halting or stabilizing. Coupled with changes in steel export policies—China's steel exports totaled 15.591 million tons in Jan-Feb, down 8.1% year-on-year—the EU cutting steel import quotas by nearly half and raising out-of-quota tariffs to 50%, additional carbon costs from the CBAM, and disruptions to steel exports to the Middle East due to US-Iran tensions, future steel prices may face increasing pressure.