SHANGHAI, Aug 22 (SMM) – Intensified environmental curbs in Wu'an city of China's top steelmaking province of Hebei is set to boost rebar fundamentals and prices in the weeks ahead.
SMM assessed that strict implementation of the cuts would reduce pig iron production by 413,400 mt and slash demand for iron ore by 711,000 mt in August. These stood 72,700 mt and 125,100 mt higher, respectively, than the estimated volumes impacted by the previous local anti-smog plan.
The environmental cutback comes on top of the already slower operation on maintenance across steelmakers in Shaanxi, Shanxi, Gansu, Sichuan, and Shandong, as high raw materials costs pushed mills to the verge of losses.
An SMM survey found that the maintenance is likely to cause a rebar supply decline by some 507,900 mt in August and 102,000 mt in September. The affected amount in August grew 262,300 mt from that in July.
Rebar production has declined for three consecutive weeks, which will continue to be reflected in the market and support prices.
On Thursday August 22, the most-liquid rebar October contract on the Shanghai Futures Exchange climbed as high as 3,718 yuan/mt and ended 1.31% higher on the day at 3,715 yuan/mt, on track to rise this week.