[SMM Rebar Daily Review] Prices rose rapidly due to news stimulus, but it was difficult to support the bottom prices

This week, rebar prices fluctuated upward. The current nationwide average price is 3,118.6 yuan/mt, up 57.4 yuan/mt MoM. On the supply side, blast furnace steel mills continued to maintain their profit levels, and many steel enterprises did not reduce their production of construction steel. However, considering the signals released by the Central Financial and Economic Commission meeting this week regarding addressing cut-throat competition, steel mills in the Yunnan and Guizhou regions have already begun to respond with production cut plans, but the implementation situation in the later stage remains to be seen. This week, some EAF steel producers resumed production as planned, and the overall operating rate increased slightly. However, the overall loss situation of steel mills remains difficult to change, and it is expected that the operating rate will continue to be at a medium-low level in the short term. On the demand side, influenced by the market rally, the trading atmosphere in the market improved this week. However, currently in the off-season for seasonal demand, transaction performance will decline trend-wise in the later stage. In terms of inventory, although in-plant inventory resources have been transferred to social inventory at a faster pace, total inventory continues to decline, and the accumulation of contradictions is not prominent for the time being. It is understood that recently, stimulated by macro news, spot prices have risen rapidly, but merchants generally report that it is difficult to sell high-priced resources, and price stability is poor. In the later stage, it is feared that the news will return to reality, and it will be difficult to support the bottom price. Overall, driven by profits, the actual reduction in blast furnace steel mills is limited. The demand side in the off-season has poor expectations, and fundamental issues still exist. It is necessary to be cautious about the risk of rebar spot prices jumping initially and then pulling back next week. The RB2510 contract will fluctuate rangebound within 2,980-3,130.