SMM daily comment on domestic rebar market (Aug 29)

Rebar prices fluctuated and closed at 3,688 yuan/mt today, a decrease of 0.14%. On the supply side, according to SMM research, the rebar production is estimated to reduce by 719,400 mt this week affected by maintenance, an increase of 17,700 mt from last week. Blast furnace steel mills saw a slight increase in overhauls. High price of scrap steel caused electric furnace steel mills hard to purchasing raw materials. Profit margins of steel mills were still thin, and the enthusiasm for production is low, so the supply of rebar slightly reduced. Demand-side markets picked up, terminals were still dominated by on-demand purchases, and intraday transactions were more positive than yesterday.

In the follow-up, on the raw material side, some steel plants initiated price reduction requirements for domestic mines. Meanwhile, the second round of coke price reductions is estimated to be realized, so cost support may weaken. On the steel side, some steel mills switched the production of other types of steel. Overall, the oversupply pressure may continue to ease, and the demand side has gradually entered the traditional peak season (September and October). Steel prices is expected to fluctuate upwards.