【SMM Rebar Daily Review】End-Users Still Have Restocking Demand Before the Holiday, Construction Steel Prices May Have Upward Momentum Next Week

This week, rebar prices rose and then stabilized. The upward movement of rebar futures drove both volume and prices higher in the market. However, market merchants operated cautiously, focusing on sales after the price increase, which somewhat restrained the extent of the rise. On the industrial side, several steel mills in Xinjiang announced a daily 10% cut in crude steel production starting immediately to continue implementing the crude steel production control in Xinjiang. SMM actively followed up and learned that this production cut is mainly for short-term control. Additionally, the upgrade and renovation of rolling lines at some steel mills in the northwest will reduce construction steel supply by 20% in April. Other regions' blast furnace steel mills maintained their current production pace. The operating rate of 50 EAF steel mills nationwide, which mainly produce construction steel, was 39.68%, down 0.5% MoM. The operating rates in east China and central China both saw slight declines, mainly due to reduced profits leading to shorter operating hours. In the short term, the operating rate is more likely to decrease than increase, with overall construction steel supply fluctuating rangebound. On the demand side, the price increase during the week stimulated some speculative demand activity. However, downstream end-users, affected by low fund availability, saw a recovery in demand strength that fell short of market expectations. The overall market sentiment remained cautious. This week, national rebar inventories continued to decline, but the destocking rate did not significantly expand. Looking ahead, after this week's price increase, market merchants focused on sales and were cautious about restocking. However, some end-users may restock during the upcoming Qingming holiday. Spot prices for construction steel are expected to remain relatively stable with a strong trend next week, and the most-traded rebar futures contract RB2505 is likely to fluctuate rangebound between 3,100 and 3,300.