[SMM Analysis] 2026 HRC-Rebar Spot Price Spread Trend: Limited Room to Break Out

•  2026 HRC-Rebar Spot Price Spread Drifted Higher, Significantly Above Last Year's Level

From the beginning of 2026 to date, the HRC-rebar spot price spread has drifted higher from 80 yuan/mt at the start of the year to 250 yuan/mt, with an average of 160 yuan/mt, significantly above the average of 88 yuan/mt in the same period of 2025.

SMM HRC-Rebar Spot Spread Chart

Source: SMM
From January to August 2026, the HRC-rebar spread drifted higher overall, with the center of the spread at the highest level in nearly four years. HRC maintained a sustained positive premium over rebar, and no deep inversion occurred as in 2024. The spread started around 80 yuan/mt at the beginning of the year, steadily rose in Q2, stayed high in a range from April to August, and approached 250 yuan/mt by August. The strength of the spread was primarily driven by supply-demand structure divergence: HRC received dual support from demand in the automotive, construction machinery, and manufacturing industries, as well as exports of sheets & plates, showing strong demand resilience; rebar, on the other hand, was dragged by the property recovery falling short of expectations, with a slower pace of recovery in construction materials demand, thus pushing the HRC-rebar spread higher.

• 2026 H2 HRC-Rebar Spread Unlikely to See Unexpected Surge

The current spread is already at a historically high level, with pressure for mean reversion. The H2 market will mainly depend on the tug of war between sheet & plate exports and peak domestic construction material demand. Entering the September peak season, rebar and HRC enter their traditional seasonal peak. If demand from real estate and infrastructure materializes, rebar prices will be boosted, and the HRC-rebar spread may retreat from highs. However, considering that the construction sector is unlikely to improve significantly in the short term, the spread is not expected to narrow sharply, and the spread is expected to move in the range of 140-230 yuan/mt. If overseas sheet & plate exports remain strong and manufacturing demand exceeds expectations, the spread may shoot up to 230-280 yuan/mt, but that level is a historical high and has limited sustainability.
Entering October and November, domestic construction material demand will gradually fade into the off-season, seasonal benefits for rebar weaken, while HRC relies on its relative advantage in exports and manufacturing, providing opportunity for the HRC-rebar spread to widen again. By December's winter stockpiling period, rebar enters the traditional off-season, while HRC demand still has external demand as a floor, so the HRC-rebar spread is likely to maintain a positive premium, expected to be in the range of 80-170 yuan/mt, with a low probability of deep inversion during the year.