[SMM Rebar Daily Review] Weak supply and demand, insufficient upward momentum for construction steel prices

Today, the futures market fluctuated downward, closing at 2968, down 0.70% from the previous trading day. In the spot market, most quotations dropped slightly, with declines of 10-20 yuan/mt, and the overall trading performance was mediocre throughout the day. On the supply side, EAF steel mills continued to experience a decline in operating rates due to difficulties in obtaining steel scrap and worsening profit losses. In the blast furnace sector, affected by the off-season demand and the diversion of pig iron due to better profits in certain steel products, individual steel mills implemented production reduction or suspension plans, leading to a significant decrease in overall supply. On the demand side, downstream construction sites maintained their basic purchasing needs, while traders lacked confidence and adopted a cautious mindset, preferring to sell at lower prices. This drove a continued decline in construction steel inventory. According to the SMM survey, the total rebar inventory this week decreased by 2.20% WoW, with in-plant inventory falling by 1.12% WoW and social inventory dropping by 2.78% WoW. Overall, the current supply and demand for construction steel are both weak. Considering the persistent heavy rainfall in south China and the prolonged high temperatures in the north, there is an expectation of further marginal weakening in demand. The upward momentum for construction steel prices is limited, so it is expected that construction steel prices will remain in the doldrums in the short term.