AboutWire rodThe price difference generally has many aspects of influence, below, I will elaborate on this in detail.

From the price difference between the two over the past three years, it can be seen that for a long time, the price of wire rod has been lower than that of rebar, which is a true reflection of cost and demand to some extent. From the perspective of the production process of enterprises, the cost of producing wire rod in steel mills is about 100 yuan/ton lower than that of rebar, so the market situation also reflects that the price of wire rod is lower than that of rebar. However, since the end of 2020, there has been a significant change in the price difference between wire rod and rebar, with the price of wire rod maintaining a continuous upward trend, while the price of rebar adjusted at the end of the year along with the overall construction steel, leading to the situation where the price of wire rod is higher than that of rebar. I will analyze the reasons for the evolution of the price difference between wire rod and rebar and what new trends the price changes may bring.

1. Reasons for the change in price difference

1. Cost factors

As one of the lowest-end varieties of industrial wire, the production and rolling requirements of wire rod are lower than those of rebar, resulting in relatively low rolling costs. Moreover, due to the increasing quality requirements for construction steel by the state, after the implementation of the new standards for construction steel, the alloy costs required for rebar are also higher than those for wire rod. Therefore, overall, the production cost of rebar is significantly higher than that of wire rod. Due to production process reasons, currently, major special steel mills in East China, such as Shayang Zhong, are basically not producing ordinary Q series wire rod, mainly producing cold heading steel and other relatively high-end industrial wire, increasing the added value of their products. Currently, the Q series wire rod in East China mainly comes from steel mills in northern regions such as Jiujiang.

2. Demand factors

There are significant differences between the users of wire rod and rebar. Wire rod, as one of the important industrial materials, is closely related to the manufacturing industry, while rebar, as the main variety of construction steel, is closely linked to construction. Before the end of 2020, the price of rebar was always higher than that of wire rod. After entering 2021, the price of wire rod continued to rise, while the price of rebar adjusted with the construction material prices, leading to the situation where the price of wire rod is higher than that of rebar. Tracing back the reasons, with the domestic epidemic being basically controlled, domestic manufacturing production fully recovered, and after the improvement of the epidemic in foreign countries, especially in Europe and the United States, demand fully recovered, which greatly boosted domestic demand, and the export of manufacturing products increased significantly, leading to a substantial rise in demand for industrial materials. At the same time, the demand for construction steel entered a seasonal off-peak period, resulting in a decrease in demand. Under the influence of different demands, the price of wire rod remained strong, while rebar adjusted, causing the price difference to change against the trend, and this has continued to this day.

2. Impacts brought by the price difference

1. Production and supply aspects

Due to the current overall price showing a trend of higher prices in the north and lower prices in the south, this is more evident in construction steel. Therefore, the price difference will inevitably lead steel mills to adjust their production plans, increase the production of industrial wire, and reduce the market supply of rebar to maximize profits. It can be foreseen that the arrival of rebar resources dominated by Jiachang and Jiujiang in the southern region may continue to decrease, while the resources of industrial wire remain relatively stable.

2. Price trend aspects

Under the current circumstances, steel mills in East China that can produce common steel may further reduce the supply of rebar, leading to a continued compression of the market supply of rebar. At the same time, due to the price difference between the north and south, the supply of rebar resources in the north has already been significantly reduced compared to previous years, so the subsequent supply of rebar may show a tighter situation. Therefore, the current price difference between wire rod and rebar may further widen, and may even change the state of the price difference.

Overall,Wire rodthe change in price difference is mainly influenced by demand. After the change in demand leads to a change in the price difference relationship, it causes steel mills to adjust their production plans, change market supply relationships, and then drive changes in the price difference again, which may ultimately reach a relatively reasonable situation. Therefore, if you want to buy wire rod that is more suitable for you and more cost-effective, feel free to consult us.

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