SMM Daily Comment On Domestic Rebar Market (Sep 18)

SHANGHAI, Sep 18 (SMM) – Rebar futures prices fluctuated upward and closed at 3,824 yuan/mt, up 1.27% from the previous trading day, and spot market prices generally rose. In terms of supply, the output of rebar from BF steel mills declined, while the operating rate of EF steel mills stayed at a low level, causing insufficient rebar supply to steel mills. In terms of demand, PBOC's RRR cut lifted market sentiment, and the impact of the typhoon faded, which improved terminal procurement demand and pulled up intraday transactions. In the follow-up, owing to strong raw material prices and urgent replenishment demand near the National Day, iron ore prices may soar and so firmly provide cost support for steel. Since in-factory and social inventories continued to be depleted, coupled with centralized downstream procurement at the end of September, the risk of structural decline in steel prices is low, and attention should be paid to the strength of downstream stocking demand.