January 16 Rebar Coil Spread

On January 16, the spread between the most-traded HRC and rebar contracts was 120 yuan/mt, down 7 yuan/mt MoM. The spread between Shagang's HRC in Zhangjiagang and Zhongtian's rebar in Hangzhou was 80 yuan/mt, remaining stable MoM

. This week, the spread between the most-traded contracts for HRC and rebar ranged between 100-110 yuan/mt, narrowing WoW. The fundamentals of rebar were slightly better than HRC, and the decline in spot rebar prices was smaller than that of HRC. Looking ahead, considering the synchronized weakening of steel demand before and after the Chinese New Year, although HRC demand showed stronger resilience than rebar, the production pressure for HRC was greater than that for rebar. It is expected that the short-term spread between HRC and rebar will lack significant drivers and will fluctuate within the range of 110-130 yuan/mt.