Rebar spot, futures price spread to stay large on trade war threat

Published: Jun 28, 2018 10:29 (GMT+8)

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The spread between rebar spot and futures prices is expected to remain large in the near term as the trade wars depress futures

SHANGHAI, Jun 28 (SMM) – The spread between rebar spot and futures prices is expected to remain large in the near term as the US spats with trade partners depress futures, SMM believes.

Such price spread was seen at 261 yuan/mt on May 25, and widened to 399 yuan/mt on June 19. As of Wednesday June 27, rebar spot price in Shanghai stood 333 yuan/mt higher than the SHFE 1810 contract, which settled at 3,688 yuan/mt.

Successive environmental probes from the end of May also accounted for the widening gap as rebar spot prices were pushed up on suspensions and production cuts. The average price spread over the past three years stood at 250 yuan/mt, SMM calculated.

However in the medium term, we expect the price spread to gradually return to a normal level as spot prices are set to dip faster than futures with pressure from the supply side.

Rebar supply is set to increase as steel mills across several provinces are scheduled to resume production in July as environmental impact eases.

Market commentary Rebar

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