SMM daily comment on domestic rebar market (Aug 11)

SHANGHAI, Aug 14 (SMM) –

Rebar futures prices dipped at first, but hiked afterwards, and finally closed up 0.08% at 3,691 yuan/mt last Friday, stimulated by the news of crude steel production reduction in Shandong. On the supply side, recent profit rout in BFs and better production efficiency of steel varieties than rebar had some steel mills switching to production of steel varieties or selling billets. In addition, hovering around a break-even point, EF steel mills had low incentive to produce. Therefore, the output of rebar slumped. On the demand side, shipments in the north were limited amid impact of rainy weather, while high temperature slowed down construction progress on construction sites in other regions. Besides, downstream buyers took a wait-and-see approach. The overall demand continued to be weak.

From the follow-up point of view, weak supply-demand fundamentals may linger in a short term. are hard to change. In-plant and social stocks will keep hiking, and traders' sales pressure will remain high. However, boosted by possibility of policies on production restrictions being implemented, rebar spot prices may cease dropping, and rebound. It is expected that the RB2310 contract will firmly fluctuate in the range of 3,680-3,820 next week.