SMM daily comment on rebar market (Aug 8)

SHANGHAI, Aug 9 (SMM) –

Rebar futures prices kept dipping yesterday, and closed down 0.78% at 3,692 yuan/mt.

On the supply side, a decline in finished product prices came at a larger magnitude than that in raw material prices, and profits of steel mills narrowed, denting BF and EF steel mills’ production enthusiasm. Currently, the mills maintained the existing production, and may plan to curb productions in case of a further profit erosion. On the demand side, given that rebar spot and futures prices declined, terminal demand appeared sluggish, while speculative demand was weak. Overall, tepid demand was reported.

In the follow-up, there was weak supply and demand, and the news of crude steel output reduction continued to be hyped, leaving sings of a weakening of market sentiment. Rebar prices may continue to fluctuate at a low level. In the short term, players are advised to keep rebar inventory low. Policies on production restrictions will deserve to be monitored.