Cross-product price spreads are an area within the rebar spread system characterized by complex logic and abundant trading opportunities. Unlike the spot-futures price spread, which reflects the spot-futures structure, and calendar spreads, which reflect expectations for near and distant months, the core of cross-product price spreads lies in macroeconomic structural adjustment and profit distribution along the industry chain. From the perspective of the industry chain, cross-product spreads for long products are mainly concentrated in the following four areas:
Source: SMM
Rebar-Steel Scrap Price Spread: Vertical Segmentation of Industry Chain Profits
Source: SMM
As the core raw material for steelmaking at short-process electric furnace mills, steel scrap prices have generally maintained a high correlation with rebar prices. However, due to differences in the pace of fundamental transmission, as well as the relatively greater fluctuations in rebar caused by its certain financial attributes, the spread between the two still showed clear fluctuation characteristics.
Looking at the spread trend over the past three years, the rebar-steel scrap price spread generally fluctuated within a range of 500-1,200 yuan/mt. In 2024, under the dual impact of policy and market sentiment, the rebar-steel scrap price spread once saw relatively extreme fluctuations. In June 2024, China introduced a mandatory transition policy from old to new rebar standards, triggering panic selling in the market and causing rebar prices to fall all the way; meanwhile, steel scrap prices remained relatively resilient, supported by tight supply, which caused the rebar-steel scrap price spread to narrow rapidly from 800 yuan/mt to 500 yuan/mt within just one month. By late September, macro tailwinds policies in and outside China were rolled out intensively, significantly boosting market sentiment. Driven by financial attributes, the rebound in rebar spot prices was both faster and larger than that of steel scrap, pushing the rebar-steel scrap price spread to widen rapidly. During the rest of the period, the rebar-steel scrap price spread basically fluctuated within a reasonable range.
Source: SMM
Judging from the linkage among the rebar-steel scrap price spread, electric furnace profits, and electric furnace operating rates, the three showed highly synchronized trends, clearly reflecting the complete transmission chain for short-process steelmaking from cost to profit to production decisions, and serving as a key basis for judging short-term steel mill profitability and supply elasticity. Based on historical patterns, when the rebar-steel scrap price spread narrows to 750 yuan/mt or below, losses at electric furnace mills will expand to more than 100 yuan/mt, and steel mills may enter a phase of widespread production cuts; when the spread fluctuates within 750-950 yuan/mt, steel mills in different regions mostly adjust operating hours flexibly according to actual demand conditions; and when the spread exceeds 950 yuan/mt, electric furnace profits will recover significantly, and the production side will tend to increase output.
At present, the rebar-steel scrap price spread stands at 710 yuan/mt. Given the currently slow pace of downstream construction site resumptions, upward momentum in rebar futures and spot prices is limited; meanwhile, steel scrap resources are relatively tight, and as steel mill inventories are gradually consumed, mills may passively raise prices to restock, so the rebar-steel scrap price spread is expected to continue fluctuating at low levels. In the long term, the rebar-steel scrap price spread is also expected to show a narrowing trend over the next five years. This is mainly because the EU carbon tariff will be formally implemented, and China’s carbon market will enter a phase of tighter quotas, forcing high-emission long-process steelmaking to shift toward electric furnace processes, thereby boosting steel scrap demand. By contrast, incremental demand from the real estate sector is limited, leaving insufficient drivers for a rise in rebar. Under the dual push of increased steel scrap demand and carbon cost transmission, steel scrap may gradually outperform rebar, causing the rebar-steel scrap price spread to narrow gradually.
Rebar-Steel Billet Price Spread: Profit Distribution from Intermediate Product to Finished Product
Source: SMM
Reviewing the price trends of rebar and steel billet over the past three years, the two basically moved up and down together. From the perspective of the production process, the theoretical spread between the two comes from the processing cost in rebar manufacturing, mainly including heating and rolling costs, totaling about 250 yuan/mt.When the rebar-steel billet price spread narrows below the rolling cost line, the profit advantage of producing rebar becomes weaker than that of steel billet, and steel mills tend to reduce rebar production schedules and sell steel billet directly.Taking Q4 last year as an example, the rebar-steel billet price spread narrowed from 200 yuan/mt to 140 yuan/mt. Due to poor profitability in construction materials, coupled with moderate support from steel billet export demand, steel mills in north-east China chose to reduce finished steel output and sell steel billet externally.Conversely, when the rebar-steel billet price spread is significantly higher than the rolling cost, rebar production becomes more profitable than steel billet, and steel mills will shift their production center back toward rebar.
Over the past two months, the rebar-steel billet price spread has basically fluctuated within 200-220 yuan/mt, slightly below rolling costs. Looking ahead, the spread is still expected to narrow slightly in the near term, mainly because under the impact of the international situation, some orders from Southeast Asian markets have shifted to procurement from Chinese exporters, making the increase in steel billet demand relatively evident and giving steel billet stronger price resilience than rebar.
Source: SMM
However, it should be noted that total steel billet inventory in Tangshan currently stands at 2.5023 million mt, far above the level seen in the same period of previous years. Overall inventory pressure is greater than that of rebar, so caution is needed against the possibility that if steel billet demand falls short of expectations, market price slashing could lead to a widening of the rebar-steel billet price spread.
Rebar-Coiled Rebar Price Spread: Demand Differences Between Products of the Same Use but Different Forms
Source: SMM
Rebar and coiled rebar are both construction long products with similar product attributes. However, due to factors such as institutional and trader positioning in futures and spot markets, adjustments to steel mill production plans, and the actual pace of market resource deliveries, phased spread fluctuations still occur between the two. Looking at spread changes over the past three years, the national average rebar-coiled rebar price spread fluctuated within 150-250 yuan/mt in 2023-2024, while in 2025-2026 it basically fluctuated within 150-220 yuan/mt.It can be seen that compared with historical data, the fluctuation range of the current rebar-coiled rebar price spread has weakened somewhat, and the trading range has become more convergent. This is mainly because the real estate market has pulled back significantly in recent years, suppressing actual demand for coiled rebar; in addition, coiled rebar has weaker financial attributes than rebar, and speculative demand has also declined significantly, causing the market’s cargo pick-up structure to tilt toward rebar, with less willingness to pick up more coiled rebar resources, thereby gradually narrowing fluctuations in the rebar-coiled rebar price spread.
Against the backdrop of increasingly similar overall demand performance, the supply-side structure has become the key variable affecting the rebar-coiled rebar price spread.Taking the 2024 market as an example, the rebar-coiled rebar price spread continued to widen from June to mid-August, mainly because in a falling market, losses on production at steel mills kept expanding, and production schedules and deliveries of coiled rebar shrank significantly. Market supply of coiled rebar was tighter than that of rebar, thereby driving a phased widening of the spread.
In addition, steel mill-led price adjustments are also an important factor affecting the rebar-coiled rebar price spread. Steel mills in different regions will price rebar and coiled rebar differently based on their own production schedules and profitability, thereby directly guiding fluctuations in the spread between the two. Taking the south-west market recently as an example, Yunnan and Sichuan and Chongqing issued notices in a concentrated manner to increase the premium on coiled rebar, driving a slight widening in the rebar-coiled rebar price spread.
Source: SMM
HRC-Rebar Price Spread: Demand Differences Across Different End-Use Sectors
Source: SMM
In terms of the long-process production route alone, both rebar and hot-rolled coil use hot metal as raw material, with differences existing only in the final rolling process. Therefore, theoretically, the HRC-rebar price spread is the difference in production costs between the two.Based on processing fees, the processing cost of hot-rolled coil is about 80-120 yuan/mt higher than that of rebar, and the market also regards this range as the normal range for the HRC-rebar price spread. However, due to differences in downstream end-use applications, the demand pace of the two often diverges, causing the actual spread to gradually deviate from the theoretical range, with phased switches in relative strength between the products.
Reviewing the HRC-rebar price spread over the past three years, it can be seen that in most cases hot-rolled coil prices were higher than rebar prices, with only a sharp inversion occurring in 2024. This was mainly because demand from the construction sector was weak in recent years, while manufacturing and exports improved year by year, causing steel demand to shift clearly from rebar to hot-rolled coil. Supported by stronger demand resilience, hot-rolled coil prices were generally higher than rebar, and the HRC-rebar price spread was positive in most cases. In July 2024, the transition event between old and new national standards for rebar intensified, and prices fell sharply. Most steel mills began maintenance and switched production to ease pressure, greatly alleviating the supply-demand imbalance; meanwhile, on the hot-rolled coil side, Southeast Asian countries launched anti-dumping investigations, and the previously strong demand supporting hot-rolled coil suddenly weakened. Under a high-supply environment, prices came under obvious pressure, and under the dual impact, the HRC-rebar price spread saw a sharp inversion.
Source: SMM
Judging from historical spread trends, the HRC-rebar price spread also showed relatively obvious seasonality. Under normal circumstances, the spread tends to widen in summer and winter, mainly because these two periods usually see more rain and snow, making construction progress at worksites more vulnerable to disruption, while manufacturing processing is mostly carried out in indoor workshops and is less affected by weather disturbances. By contrast, around September is often the stage when the HRC-rebar price spread is most likely to narrow, as this is the seasonal peak demand period for rebar, when its price performance is usually stronger than that of hot-rolled coil.
At present, the HRC-rebar price spread stands at 135 yuan/mt, slightly above the normal fluctuation range. Looking ahead, considering the uncertainty brought by overseas geopolitical conflicts, hot-rolled coil exports to core Middle Eastern regions will face a relatively large impact; by comparison, the impact on bar products in the long products segment is relatively limited, while steel billet is even expected to accelerate its replacement of the export share vacated by constrained Iranian resources. Overall demand support is stronger than for hot-rolled coil, so the HRC-rebar price spread is expected to have room to narrow further.
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