[SMM Rebar Daily Review] Merchants Operate Cautiously, Market Trading Activity Declines

Today, rebar futures fluctuated downward, closing at 3,022, down 1.63% from the previous trading day. In terms of spot prices, the market was filled with wait-and-see sentiment, and spot prices continued to decline. Prices in various regions fell by 10-30 yuan/mt, with overall market trading remaining weak. On the fundamental side, supply side, according to SMM production schedule data, there was a shortage of coiled rebar specifications in the supply of some steel mill projects in North and North-West China. To replenish market resources, there was a slight inclination towards coiled rebar production in pig iron in May. Additionally, most blast furnace steel mills had positive cash flow profits, with individual manufacturers planning to reduce hot-rolled coil production and increase construction steel output. Recently, some EAF steel mills completed maintenance and had production resumption plans. The operating rate may increase slightly next week. However, considering that spot prices are still in a phase of continuous decline, it is difficult to obtain cost-effective steel scrap, and the profitability of electric furnaces is unlikely to improve significantly, leaving limited room for production to increase. Demand side, after the holiday, there was a phased slight increase in market demand in some regions. However, with an increase in rainy days in south China, the construction progress of downstream sites was restricted, and demand is likely to remain weak in the later period. Overall, steel mill production is currently profit-driven. With blast furnace steel mills generally having positive cash flow profits, the momentum to produce construction steel remains strong. However, as demand gradually transitions into the off-season, the increase in supply and decrease in demand are not conducive to the strengthening of spot prices. It is expected that the spot trend of construction steel will remain under pressure in the short term.