Rebar prices to moderate on stable supply, slower demand dampened by rainfalls

SHANGHAI, Jun 15 (SMM) – Spot prices of construction steel rebar may continue to moderate this week as supply stabilises while seasonality deters the release of demand. But expectations of demand recovery after the rainy season and firm costs of raw materials kept steel mills from lowering offers, which may underpin near-term rebar prices. 

Rebar production expanded last week but any upsides in supply will be limited as most producers are running at full capacity. 

An SMM survey showed that planned output of construction steel rebar across China’s major blast furnace steelmakers in June edged up 0.17% from the realised production in May to 9.21 million mt. Scheduled production of wire rods in June, meanwhile, decreased 0.46% from the actual output in May to stand at 2.66 million mt. It is understood that blast furnace steelmakers that mainly produce rebar and wire rods will retain full operation in June. 

The operating rates of 34 independent electric arc furnace (EAF) steel mills in China averaged 83.59% as of June 12, down 1.17 percentage point from June 4, according to SMM data. Some steel plants in south China said they scaled back production due to the pullback in rebar prices and the slowdown in consumption amid rainy weather. 

On the demand front, the ongoing rainfall in east, south and south-west China will continue to affect construction work and shipments of steel products. Demand in north China outperformed that in the south and the situation will sustain. 

In the medium-to-long term, however, the need to step up construction and the start of new projects will offer strong support to consumption. 

Intensified cautious sentiment depressed spot rebar trades. SMM assessed the national average prices of spot rebar at 3,737.8 yuan/mt as of June 12, down 31.8 yuan/mt from a week ago.