SMM daily comment on domestic rebar market (Aug 30)

SHANGHAI, Aug 30 (SMM) – Rebar futures prices trended higher today, and closed up 0.95% at 3,713 yuan/mt. On the supply side, according to SMM research, operating rate of EFs this week was up 0.68 percentage points WoW to 40.71%, mainly due to restart of some EFs in East China from equipment upgrades. However, lingering scraps supply tightness and sustained profit slips blunted EF-based steel mills’ production enthusiasm, and most of them kept production mid-to-low. Hovering around a break-even point, some EF-based steel mills turned to maintenance and production cutbacks. The overall supply of construction materials steadily shrank. On the demand side, rebar futures prices hiked at the closing session, boosting market sentiment. Speculative demand inched up, while rigid demand from downstream sectors was reported. Rebar market activity appeared moderate.

Looking at the follow-up, on the macro level, there are rumors that the Finances may issue new bonds. In addition, many banks formulated plans to lower the interest rate of existing mortgages. On the raw material side, bolstered by acceptable demand, iron ore prices will be inclined to hike, rather than a drop. The second round of coke price slip is unlikely to be monitored within a week. Under such circumstance, short-term cost support for rebar will be acceptable. On the finished product side, with a peak season in September and October approaching, demand is expected to improve. It is expected that rebar market may fluctuate in firmness on the near-term horizon.