SMM daily comment on rebar market (Aug 7)

SHANGHAI, Aug 8 (SMM) –

Rebar futures prices trended higher after a drop yesterday, and closed down 0.53% at 3,732 yuan/mt. On the supply side, market permeated news of production restriction in August, but there was no actual implementation for the time being. After the fourth round of coke price hikes, profits of steel mills tightened, denting their willingness to produce. However, for the sake of maintaining production capacity, some steel mills switched from finished products to steel billets. On the demand side, terminal demand appeared muted amid fallout of high temperature and rainy weather. Therefore, trading sentiment appeared lukewarm.

In the follow-up, "weak reality and strong expectations” resurfaced. However, given excessively hyped policies on news of the economy and crude steel output limit in the early stage, participants turned to the fundamentals of supply and demand. Currently, a decline in demand for rebar came at a larger magnitude than that of supply, thereby accelerating pile-up of rebar stocks in the off-season. It is expected that the rebar market will continue to fluctuate in the short term.