
The steel industry, often described as "cold," has not shown any signs of warming even amid summer's rising temperatures. Last week, the main rebar contract plummeted by 4.34%, reaching a 9-month low of 9,116 yuan per ton—down from a high of 34,160 yuan per ton earlier this year. Open interest surged to a record high of 2.477 million contracts, indicating strong market participation despite the downward trend. On June 3, Rb1310 closed at 4,483 yuan per ton, showing a modest gain of 1.52%.
The decline in rebar prices began after the Lunar New Year this year, with prices falling from a peak of 4,300 yuan per ton to 3,400 yuan per ton—a drop of 20.93%. This sharp correction has had a ripple effect on related markets, particularly the iron ore sector. On May 30, the Platts index fell to $111.5 per ton, marking a new annual low. However, the China Steel Association recently reported that crude steel production in mid-May reached an estimated 2,185,400 tons, remaining at a relatively high level and providing some support for iron ore prices.
Despite this, the spot market for rebar remains sluggish. In Beijing, the price of third-grade rebar dropped by 50 yuan per ton compared to the previous week, while in Shanghai, rebar prices fell by 130 yuan per ton. Analyst Jiang Hang from Nanhua Securities noted that traders are holding low inventory due to the impact of early steel trade loans, and their purchasing appetite is weak. This puts pressure on steel mills to ship goods quickly, further weighing on prices.
Looking ahead, Jiang Hang believes that as steel costs fall and inventory piles up, rebar prices are likely to remain under pressure. According to data from the China Iron and Steel Association, social inventories of five major steel products in 22 cities declined significantly in May, especially for wire rods and rebar. Galaxy analyst Zhang Yuan added that rising labor and environmental protection costs, combined with declining spot transactions, suggest that the steel industry will continue to struggle in the near term.
Zhang also highlighted that recent land price increases in first-tier cities may lead to the launch of real estate tax pilots, which could add long-term pressure to the steel sector. With no clear signs of macroeconomic improvement and the traditional steel season drawing to a close, he expects rebar prices to remain in a downtrend in the short term.
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