Overview: In April, due to the combined influence of "cost floor support and demand recovery", the price of construction steel showed a "first downward then upward" trend. In the first half of the month, signals of easing in the US-Iran conflict emerged, and the energy premium reversed, with the decline in raw material prices leading to a slight downward movement in steel prices. After the middle and late months, the geopolitical conflict resumed and intensified, and cost support was re-empowered. At the same time, there was a phased release of construction steel demand needs in April, coupled with the rebound of futures and the recovery of some speculation, the speed of inventory reduction in the market accelerated, market sentiment was significantly restored, and the price increase of steel also expanded. As of April 30th, the absolute price index of steel bars on Mysteel closed at 3407.59, up 77.39 from the previous period, with a growth rate of 2.32%. 

Looking ahead to May, the demand side is expected to show a "high in the beginning and then decreasing" trend. In the middle and upper parts of the month, with the concentrated replenishment of projects after the holiday and the seasonal inertia of the construction sector providing support, the demand still maintains certain resilience; however, as the profit margins of construction steel continue to expand at present, the output of steel mills in the lower part of the month will have a new round of increase, and the supply pressure will increase. Especially as the southern rainy season gradually unfolds, the construction pace will slow down, which will drag down the terminal demand. Overall, the market pressure in May will gradually increase, and the prices are expected to rise first and then decline. In May, how will the construction steel market operate and which variables need to be closely watched? In this article, we review the situation in April and then look forward to the market trend in May.

In April, the price increase of domestic construction steel rose. As of the 30th, the national average price of rebar in major cities was 3,415 yuan per ton, with a monthly increase of 83 yuan per ton. This month, the prices in major cities across the country continued to differentiate, with the price increases in North China and South China ranking first, while the overall market in East China was relatively weak. Specifically, the market price in Beijing rose by 100 yuan per ton, the market price in Guangzhou rose by 90 yuan per ton, while the market price in Shanghai only rose by 40 yuan per ton. 

As of April 30th, the Mysteel long-bar index closed at 141.1, up by 1.59% month-on-month and 1.10% year-on-year; the Mysteel rebar price index closed at 134.81, up by 2.32% month-on-month and 1.93% year-on-year; the Mysteel wire rod price index closed at 148.06, up by 1.67% month-on-month and 1.13% year-on-year. 

II. The开工rate and output of construction steel have continued to rise overall. 

The production rates of rebar and wire rods have slightly increased.

As of the end of April, the开工 rate of steel mills for construction steel across the country has slightly increased compared to the previous month. On April 30th, the开工 rate of rebar was 40%, up by 0.66 percentage points compared to the previous month； the开工 rate of wire rod was 46.51%， up by 1.74 percentage points compared to the previous month. By process， the开工 rate of rebar for long-process enterprises increased by 0.46 percentage points month-on-month， while the开工 rate of wire rod remained unchanged month-on-month； the开工 rate of rebar for short-process enterprises rose by 1.18 percentage points month-on-month， and the开工 rate of wire rod rose by 14.29 percentage points month-on-month. 

2. The output of construction steel has continued to show an upward trend overall.

In April, the output of construction steel first increased and then decreased, and the final value was slightly lower than that of the previous month. By region, taking rebar as an example, the weekly output of the seven regions increased by four and decreased by three compared with the previous month. Among them, the output in the Northeast, Northwest, North China and East China regions increased by 19,500 tons, 7,400 tons, 4,000 tons and 32,200 tons respectively, while the output in the Central China, South China and Southwest regions decreased by 41,200 tons, 6,100 tons and 17,600 tons respectively. 

As of April 30th, the weekly output of rebar was 206.92 million tons, a decrease of 0.18 million tons compared with the previous month and a decrease of 26.46 million tons compared with the same period last year; the weekly output of wire rod was 83.88 million tons, a decrease of 0.90 million tons compared with the previous month and a decrease of 0.21 million tons compared with the same period last year. By process, the output of rebar in long-process enterprises increased by 2.89 million tons compared with the previous month, while the output of wire rod decreased by 2.55 million tons; the output of rebar in short-process enterprises decreased by 3.07 million tons compared with the previous month, and the output of wire rod increased by 1.65 million tons compared with the previous month. 

III. In April, the inventories of steel mills and the general market continued to decline. 

Demand has picked up and overall inventory pressure has eased.

Output of construction steel is expected to rise again. 

In April, the steel mills did not take a firm stance in resuming production of construction steel, and the overall output rose and then declined. Looking ahead to May, the production of steel mills in the north will gradually return to normal. Driven by the recovery of profits, the output of rebar is likely to rise again to above 2.15 million tons. Considering that the current demand is at its peak, the increase in transaction volume in May will not be significant. It is expected that the production pressure will gradually emerge after the middle and end of the month. 

Raw material prices may remain at a high level, and market competition will be more prominent. 

In terms of iron ore: The price of iron ore remained stable overall in April. The iron water production is expected to peak in May. Meanwhile, although the inventory of imported iron ore at 47 ports has slightly decreased, it still remains at a historically high level. The pressure of port accumulation continues to suppress the iron ore price. Therefore, the iron ore market is likely to gradually shift to a more relaxed pattern. In terms of coke: In April, the domestic coke market achieved two rounds of price hikes due to the recovery in demand and cost support. The third round of price hike in May has some room for implementation. However, it should be noted that after traders stockpiled goods, there is a risk of phased selling. Coupled with the fact that the iron water production is close to its peak in May and the demand growth slows down, the price increase trend of coke will tend to moderate, and the characteristic of high-level market speculation will become more prominent. 

Steel factory inventories and social reserves are expected to decline further, with the reduction rate possibly narrowing. 

In May, the inventory of construction steel will continue to follow the trend of decline. However, the pace of inventory reduction will shift from the rapid reduction in April to a situation of stability first, then a slower pace with a significant reduction in the decline rate. The inventory pressure at the steel mills is relatively controllable. The high-level and steady decline in social inventory is the most crucial inventory variable in May. Whether the decline speed can withstand the dual pressures brought by the recovery in production and the seasonal weakening of demand will determine the trend of steel prices. Therefore, the turning point of inventory reduction is expected to occur around the end of May, and the inventory pressure will gradually be transmitted to the price end. 

Looking ahead to May, the market will enter a transition period between the peak and off-peak seasons. The supply and demand competition will gradually intensify, and prices will generally face downward pressure. Specifically, in the first and middle weeks of May, with the concentrated replenishment of projects after the holiday and the seasonal inertia of the construction sector providing support, demand still retains certain resilience; however, as the profit margins of construction steel have expanded at present, the output of steel mills will experience a new round of increase in the latter part of the month, and the supply pressure will increase. Especially as the southern rainy season gradually unfolds, the construction pace will slow down, which will drag down the terminal demand. Overall, in May, there will be more variables in the market, especially with limited growth in demand, relatively high inventory levels, and with costs providing support but lacking upward momentum, the market risks will gradually expand in the latter half of the month, and prices may show a trend of being higher at the beginning and lower at the end.