In April, the building materials market in North China finally ushered in a long-lost recovery, and the continuous price decline after the Spring Festival made the Beijing-Tianjin-Hebei building materials market merchants suffer heavy losses. In April, the market prices of building materials in North China have rebounded significantly, basically close to the price before the sharp decline in March, the market mentality is relatively good, and the bullish expectations are enhanced.
Review of building materials market in cities in North China in April:
In April, driven by the dual repair of fundamentals and industry, the previous decline in the Beijing-Tianjin-Hebei building materials market was swept away, the market mentality improved, and the bullish sentiment was mobilized. Especially in early and mid-April, the demand is concentrated to release, funds are also from the disk positive upward force, steel mills, traders are seizing the opportunity to actively win profits, actively raise prices, in early April and mid-April North China building materials market prices are obvious. Until the end of the month, demand began to shrink after two consecutive weeks of release, the market price increase enthusiasm began to cool down, wait-and-see sentiment began to condense, and the price of building materials in Beijing, Tianjin and Hebei stabilized. Selected Beijing, Tianjin, Tangshan, Shijiazhuang four cities leading steel mills HRB400E18mm rebar price comparison, April these four cities compared with March prices have risen sharply, the increase is obvious, compared with March rebar increase of more than 250 yuan, basically back to the beginning of March before the price fell sharply before the level.
The output of building materials of steel mills in North China is at a low level, the market arrival is poor, and the social treasury continues to decline
Due to the consideration of profit and other factors, the flow direction of molten iron in steel mills in North China has changed. After the Spring Festival, steel mills building materials profit meager or even loss, the mainstream steel mills in North China are biased towards the production of plates and other varieties of materials, building materials have a phased reduction in production, building materials production in April low operation. Judging from the arrival of steel mills and markets in April, with the slight improvement in terminal demand in April, the number of steel mills directly sent to the construction site has also increased, coupled with the export of some steel mill resources, resulting in a further reduction in the steel mill warehouse and the amount of resources sent to the Beijing-Tianjin-Hebei market. According to the Beijing-Tianjin-Hebei dedication agreement households, this month's dedicated delivery volume has only reached about 30% of the agreed volume so far, and the delivery volume is seriously insufficient.
From the perspective of the social treasury, according to the statistics of Lange Iron and Steel Network, as of April 26, the inventory of rebar in Beijing was 378,000 tons, a decrease of 38.86% over the previous month, the inventory of rebar in Tianjin was 64,700 tons, a decrease of 45.73% over the previous month, the inventory of rebar in Shijiazhuang was 127,700 tons, a decrease of 13.55% over the previous month, and the inventory of building materials in Tangshan was 104,000 tons, a decrease of 35.53% over the previous month. Judging from the rebar inventory in Beijing, Tianjin, Tangshan and Shijiazhuang building materials markets, the inventory of building materials markets in North China further declined in April, especially in Beijing, Tianjin and Tangshan. According to the market, in April, Beijing, Tianjin, Tangshan and other places even had a shortage of specifications. The shortage of resources has led to a strong reluctance to sell by merchants, which also plays a strong supporting role in the spot price of building materials in Beijing, Tianjin and Hebei in April.
Demand has picked up, and the market trading atmosphere has begun to be active
In the first half of April, with the continuous rebound of the futures market, the trading atmosphere of the building materials market in the Beijing-Tianjin-Hebei region began to be active, and the demand was released. It is understood that after the Qingming Festival, the terminal demand accumulated in North China began to be released, the frequency of terminal procurement was significantly accelerated, the number of new projects started, the enthusiasm of downstream construction sites to take goods increased, and the volume of terminal procurement increased. With the increase in terminal purchases and the rapid rebound of futures, the bullish sentiment of merchants has become stronger, speculative demand has also begun to be active, and the frequency of buying and selling has accelerated. Until late April, although the market activity has decreased, it has not had much impact on the market price, which shows that the market is still confident in the fundamentals.
The data for the first quarter is positive, and macro expectations are strengthened
With a series of economic activity indicators of the world's major economies released since the end of March, most of them exceeded market expectations, and various domestic economic data for the first quarter of April were released, and from the data itself, the GDP in the first quarter of 2024 was 5.3% year-on-year, showing a good recovery trend. Manufacturing investment has performed strongly, and infrastructure investment has also improved slightly under the influence of localized bonds. The positive data for the first quarter boosted market confidence. In addition, various macro policies in April also boosted the market. The first is to further optimize the housing provident fund policy in many places: on April 8, Beijing, Suzhou, Shenyang, and Guangzhou all issued provident fund optimization measures. Favorable provident fund policies are frequently issued, demonstrating the city's support and promotion of housing consumption. Then there was a series of policy measures on the financial front, on April 15, the first bowl of "spicy noodles" in the second quarter was served as scheduled, and the People's Bank of China carried out a "shrinking parity" continuation of the maturing MLF (medium-term lending facility) for the second consecutive month, in line with market expectations. On April 23, the Ministry of Finance issued a document supporting the gradual increase in the purchase and sale of treasury bonds in the open market operation of the central bank, and the central bank then issued a statement that the trading of treasury bonds in the secondary market can be used as a liquidity management method and a reserve of monetary policy tools. A series of policy releases also strengthened the market's macro expectations for the second quarter, and also formed a certain supporting role for market prices in April.
On the whole, in April, the building materials market in North China formed an effective and sustained rebound under the effect of resonance of the fundamentals and the industrial side. Although the spot market rally was blocked after the weakening of demand and capital in the second half of the month, the market did not fall as quickly as before, but chose to stabilize and wait and see, which shows that the continuous rebound has greatly boosted market confidence, and the previous logic has changed to a certain extent. For the market in May, the terminal and speculative demand before the "May Day" holiday were cautious, and the Beijing-Tianjin-Hebei region as a whole did not see a significant replenishment, and it is unlikely that the price will continue to rise rapidly in the early days after the holiday, but the pre-holiday cost rises, steel mills are high, and the inventory is low, and the supporting role is also more obvious, and the possibility of a rapid decline in prices after the holiday is not large. Therefore, after the "May Day" holiday, the building materials market in North China may be cautious and narrow in early May. But from the overall point of view in May, with the rise in costs, North China steel mills building materials production is unlikely to increase, in May Beijing-Tianjin-Hebei region of the factory and social treasury will remain low, North China building materials market resources will be tightened or will intensify, and terminal and speculative demand after a period of wait-and-see after a period of accumulation of strength in the futures rebound continue to release, market prices or will continue to run strongly under its stimulus. Therefore, it is expected that the building materials market in North China will fluctuate strongly in May. (Lange Steel, Ma Xing)