Rebar demand in China is fundamentally linked to building construction—residential, commercial, and industrial—as well as infrastructure such as bridges and tunnels. This makes rebar consumption highly sensitive to the health of the construction sector. Since 2021, China’s construction activity has been subdued, primarily due to a sustained correction in the property market. Housing construction, which historically absorbed up to 40% of China’s steel, remains particularly weak. New housing starts declined significantly in 2024, and the total floor space under construction has continued to contract, resulting in a direct reduction in rebar consumption.

By early 2025, anecdotal evidence indicated that many construction sites, especially in the residential segment, were either paused or operating at reduced capacity due to developers’ liquidity challenges. Even as infrastructure construction has shown some growth, much of the steel required for large-scale projects is in the form of plate and wire rod, while rebar demand is more concentrated in road and general construction. As a result, overall long steel demand—including rebar and wire rod—has remained subdued. According to industry reports, long steel consumption and operating rates at major construction projects in Q1 2025 were weak, even during the traditional post-winter recovery period, highlighting the depth of the demand slowdown.

A key indicator of rebar demand health is the seasonal drawdown of inventories. In both 2023 and 2024, rebar inventories declined by summer but at a slower pace than usual, reflecting only modest demand. In 2025, SteelHome data showed rebar inventories peaking at lower levels and falling to approximately 11.6 million tonnes by May—a multi-year low for that period. Rather than indicating robust demand, this low inventory level suggests that supply has been curtailed or redirected to export markets, as mills sought to avoid unsold stock through output reductions and maintenance shutdowns.

On the supply side, China possesses vast rebar production capacity. A significant share of the country’s one billion tonne steelmaking capacity is dedicated to construction steel, with hundreds of small and medium-sized blast furnaces and electric-arc furnaces (EAFs) focused on rebar output. In recent years, government-led capacity swap programs have encouraged the replacement of outdated plants with newer facilities capable of producing higher-grade rebar to meet updated seismic standards. Despite the elimination of obsolete induction furnaces in 2017 and efforts to curb substandard steel, overall rebar capacity remains well above current domestic requirements.

By early 2025, anecdotal evidence indicated that many construction sites, especially in the residential segment, were either paused or As of 2025, rough estimates put China’s annual rebar production capacity at well over 300 million tonnes, while actual consumption may be 250 million tonnes or less, given the ongoing property sector slump. This persistent gap between capacity and demand has intensified competition among mills and driven an increase in export activity, as producers seek to manage excess supply and avoid inventory build-up.

The government’s capacity swap program, while aimed at modernizing the sector and improving product quality, has not resolved the fundamental issue of overcapacity. Even after the closure of obsolete facilities, new and more efficient rebar-oriented plants have come online, maintaining a production base that significantly exceeds current domestic needs. As a result, Chinese mills are compelled to compete aggressively, both domestically and in export markets, to secure sales and maintain utilization rates.