SMM daily comment on domestic rebar market (Aug 31)

SHANGHAI, Aug 31 (SMM) – Iron ore prices gained the most, compared with ferrous metal prices. Rebar futures closed up 1.16% at 3,738 yuan/mt. On the supply side, some BF-based steel mills turned to maintenance and production cutbacks, while EF-based ones kept operating rate low. Under such circumstance, supply of construction materials shrank steadily. On the demand side, today's manufacturing PMI data slightly beat expectations. At the same time, some urban mortgage policy was adjusted. In addition, inventory of construction materials diminished. Speculative demand remained, while rigid terminal demand was reported. Rebar market activity appeared moderate.

In the future, the manufacturing PMI data hiked for 4 consecutive weeks. Furthermore, there was release of macro policies such as falling interest rates on deposits and loans and housing loan policy adjustment. Therefore, economic expectations continued to improve. In the spot market, current supply-demand fundamentals persistently appeared weak. Short-term rebar market will swing on a wide range, but may firm up on a possible pick-up of demand triggered by upcoming a peak season.