SHANGHAI, Dec 4 (SMM) – Continued weak fundamentals will cap the increase in spot prices of rebar after improved market sentiment from eased US-China trade tension rallied prices, SMM believes.
Spot prices of rebar rebounded across domestic markets on Monday November 3 after US President Donald Trump and Chinese President Xi Jinping agreed to suspend any new tariffs for 90 days.
Profits are likely to push some steel mills to postpone their maintenance schedules for December. As of December 3, gross profits of rebar produced by blast furnaces stood at 735 yuan/mt, SMM assessed from imported iron ore prices at $68.5/mt. Profits of rebar produced by electrical arc furnaces (EAFs) rebounded to 108 yuan/mt, from losses, SMM calculated.
Current scheduled maintenance across surveyed steel mills will affect production of rebar and wire rods by 1 million mt in December, compared with an affected output of 1.26 million mt in November, an SMM survey found.
This winter, regional environmental curbs are likely to ease in eastern China. Steel mills will return from maintenance or production cuts, and expand overall supplies of steel products in December.
Overall rebar inventories in China began to accumulate on Thursday Novermber 29, but some markets saw tight supplies. In Hangzhou, social inventories of rebar stood at 189,000 mt as of last Thursday, compared to the usual 300,000 mt. This may support spot prices in the short run.