Due to support from rising raw materials prices, Chinese hot rolled coil and rebar futures rose rapidly in a volatile market on Wednesday. More producers are meanwhile scheduling maintenance to lower production, Kallanish notes.

On 27 January on the Shanghai Futures Exchange, May 2021 rebar futures closed CNY 82/tonne higher than Tuesday at CNY 4,385/t ($677/t), while the same contract for HRC closed up CNY 93/t at CNY 4,521/t. In Tangshan, billet prices gained CNY 20/t at CNY 3,860/t, accelerating from Tuesday’s increase.

Iron ore futures also increased sharply during trading on Wednesday, following the increase in Tangshan billet prices. In the spot market, some steelmakers in Tangshan began to accept the 15th consecutive round of prices increase for coke.

Although steel futures increased sharply, the pattern of weak demand has not changed. Some northern rebar suppliers are facing losses at current prices. Tight EAF margins are meanwhile bringing down supply. SMM data shows that the operating rate of 34 major independent EAF plants that mainly produce building materials dropped by -8% on-week.