SMM daily comment on domestic rebar market (Aug 28)

SHANGHAI, Aug 29 (SMM) –

Prices of ferrous metal declined universally. Rebar futures closed down 1.27% at 3,667 yuan/mt. On the supply side, with a scrap supply crunch, EF-based steel mills who were in a break-even point had little incentive to produce. Despite with scheduled maintenance starting September, BF-based steel mills kept overall production unchanged. Under such circumstance, the output of construction materials changed little. On the demand side, news of the halving of stamp duty failed to effectively boost the financial market for a short period of time. In addition, a decline in the stock market dragged down futures prices, and ferrous metal futures markets swing in bearishness. Rigid terminal demand was reported. Rebar market activity appeared thin.

Looking at the follow-up, National Regular Meeting may continue to release favorable policies to boost market confidence tomorrow. On the raw material side, the second round of coke price slip may unfold after a game. Iron ore market will swing on a stable note on the near -term horizon. In a word, cost support will slightly taper off. On the finished product side, demand is unlikely to pick up. However, market expectations on implementation of policies on crude steel production restrictions will remain. If the implementation is further clarified, rebar prices may move upwards, and short-term construction materials spot market may continue to fluctuate widely.