Rebar supply pressure unlikely to ease in near term

SHANGHAI, Oct 24 (SMM) – Supply pressure of construction steel rebar may unlikely to ease in the short term as margins kept production enthusiasm at highs and environmental output controls have so far caused little impact. 

Steelmakers with iron ore as feedstock were not willing to cut production given profits around 408.8 yuan/mt, according to SMM assessments as of October 23. Most steel plants saw rebar profits of 100-300 yuan/mt. 

New restrictions in China’s top steelmaking hub of Tangshan were extended to 12:00 CST on October 24, but the curbs were fleeting and focused only on sintering capacity. 

Steelmakers in north China’s Shandong province will also soon recover from 30%-50% output cuts that started from October 19. 

As of October 24, steel producers in most regions reported elevated inventories at plants, but the stocks were still in controllable range and significantly lower than the record peaks. 

SMM assessed that prices of spot rebar in China averaged 3,812.8 yuan/mt on October 23, 7 yuan/mt higher than a day earlier after prices falling from a high of 3,911 yuan/mt since October 8. 

However, bearish mood and less support from fundamentals are expected to keep rebar prices under pressure in the weeks ahead.