SHANGHAI, Sep 19 (SMM) – SMM expects spot rebar prices to continue to receive support from an overall brisk demand season during September-October, even as the latest announcement of construction restrictions dented demand outlook and depressed spot and futures prices of rebar as of Wednesday September 18.
While curbs on construction in Shanghai will weaken consumption of steel products, regulations in Beijing-Tianjin-Hebei regions and in Xingtai of Hebei province also focus on output cuts across steelmakers.
China's Ministry of Ecology and Environment on Wednesday September 18 unveiled the draft plan of the long-awaited smog-control plan for the 2019-2020 autumn and winter season in Beijing-Tianjin-Hebei and surrounding areas. During October 1-March 31 of 2020, 28 cities are required to intensify environmental restrictions, on a case by case basis, and push forward their industrial upgrading.
Earlier this week, Shanghai released a notice on tightening restraints on local construction works during September 15-November 15, for better air quality ahead of the 2nd China International Import Expo and the National Day. House demolition is banned and traffic controls are tightened up during the period.
In the anti-pollution plan released by Xingtai in China’s major steelmaking hub of Hebei province, key steel mills will face suspension of blast furnaces and cutbacks on sintering capacity.
On Wednesday September 18, futures prices of ferrous complex fell on worries about subdued demand, with the most-traded rebar contract on the Shanghai Futures Exchange ending lower for the second straight session, by 1.33%.
Bearish sentiment also lowered traded prices of spot rebar by some 20-30 yuan/mt on Wednesday’s afternoon.