SMM daily comment on domestic rebar market (Sep 1)

SHANGHAI, Sep 1 (SMM) – Rebar futures closed up 1.73% at 3,813 yuan/mt. Constant positive news this week promoted ferrous metal prices to gain dramatically. Triggered by stamp duty cut, IPO tightening, lower financing margin, and other news at the beginning of this week, ferrous metal market soared and then fell back. In the middle of the week, the Bureau of Statistics announced that China's manufacturing PMI rose to 49.7% in August. Many places launched the policy of "Issue loans based on housing ownership", and PBOC and the Financial Supervision Bureau jointly issued policies related to reducing mortgage interest rates and optimizing lending. Steel prices fluctuated upward as the housing market sentiment was encouraged. In terms of the spot market, the continuous rainy weather in East China and other places caused the downstream to maintain on-demand purchases, and the overall transaction performance was slightly lower than expected.
In the follow-up, molten iron production hovered at a high level, firmly supporting raw material demand and costs. Rebar profit is thinner than some other types of steel, resulting in low to medium output in steel mills. Entering September, SMM believes that downstream demand can see a slight pick-up in the upcoming peak season. Due to the positive sentiment at the macro level, it is expected that steel prices will continue to fluctuate and move up slightly next week. In the medium to long term, buyers should pay attention to downstream demand, steel inventory and macro policies’ effect. It is advisable to purchase more finished steel when market prices go down.