January 15 Rebar-Coil Spread

On January 15, the spread between the most-traded HRC and rebar contracts was 127 yuan/mt, up 1 yuan/mt MoM. The spread between Shagang's HRC in Zhangjiagang and Zhongtian's rebar in Hangzhou was 80 yuan/mt, up 10 yuan/mt MoM. This week, the spread between the most-traded contracts for HRC and rebar fluctuated within the 100-110 yuan/mt range, narrowing WoW. The fundamentals of rebar were slightly better than HRC, with spot price declines for rebar smaller than those for HRC. Looking ahead, considering the synchronized weakening of steel demand before and after the Chinese New Year, although HRC demand showed stronger resilience than rebar, the production pressure for HRC was greater than that for rebar. It is expected that the short-term spread between HRC and rebar will lack significant drivers and remain within the 110-130 yuan/mt range.