Rebar prices rally on supply worries amid production cuts 

SHANGHAI, Sep 4 (SMM) – Prices of rebar continued to trend upwards on the morning of Wednesday September 4, extending a rally on Monday, as supply worries on output cuts spurred downstream purchases. 

As of Wednesday, quotes of rebar in Hangzhou grew 10-20 yuan/mt from the previous day to stand at 3,690-3,710 yuan/mt by Jiangsu Shagang and at 3,670-3,690 yuan/mt by Zenith Steel. This followed after a rise of 10-40 yuan/mt in most cities on Tuesday.

On Tuesday September 3, rebar prices climbed 20-40 yuan/mt in Zhengzhou of Henan province amid active trades. The upcoming 11th Chinese Ethnic Games, to be held in Zhengzhou during September 8-16, limitedly impacted downstream demand as only construction sites located near the downtown area and that caused severe dust pollution were ordered to suspend. 

Previous declines in spot prices of rebar, from early July to the end of August, eroded its profits and saw signs of hot-rolled coil margins surpassing that of rebar as of Tuesday September 3. However, this may unlikely prompt steel mills to shift capacity to hot-rolled coil as downstream demand for steel plate has yet to pick up and as rebar prices rebounded. 

Fundamentals are expected to support near-term prices of rebar as cutbacks across EAF steel mills continue, Wu’an tightened its output cuts for September, and Tangshan put additional curbs on steel production for a certain period.