Strong construction demand to underpin rebar prices while supply expands 

SHANGHAI, May 6 (SMM) – Prices of construction steel rebar will likely stay rangebound in the weeks ahead, underpinned by strong demand from stepped-up operations at construction sites while supply pressure continues to mount. 

Accelerated construction work and some stockpiling demand after the Labour Day holiday will offer support to rebar fundamentals. An SMM survey showed that China’s construction and infrastructure sectors have resumed work at a rate of more than 93% by end-April, with over a third of the enterprises reporting need to ramp up operations. 

On the supply front, blast furnace steelmakers are expected to reach full production capacity for rebar in May as some mills returned from maintenance and shifted capacity to rebar for higher profits. This will keep overall rebar supply at high levels even as an extended rally in steel scrap prices during the holiday constrained the operating rates at electric arc furnace (EAF) steel mills. 

Continuous production during the holiday, together with holiday-thinned spot trades may significantly slow the decline in rebar inventories this week. 

SMM assessed the national average prices of rebar at 3,551.7 yuan/mt as of April 30, up 0.3% from end-March, the first month on month increase since last December. 

Prices of common square billet in Tangshan edged higher during the five-day Labour Day holiday. This, coupled with expectations of post-holiday restocking, lifted quotes of spot rebar by 10-20 yuan/mt in some markets over the holiday.