Chinese rebar futures rebound as few mills refuse to deliver future cargoes

SHFE rebar futures rebounded on 11 Nov'21 after witnessing consecutive drops in the past few days. The futures bounced back after five steel mills in China refused to deliver the Jan'22 future cargoes due to a significant drop in futures that went below domestic prices.

According to Lange Steel five leading steel mills in China, namely, Hebei Xinda Steel, Qinhuangdao Baigong Steel, Fengan Donghua Iron and Steel, Tangshan Songting Iron and Steel, and Hebei Jinxi Iron and Steel have mutually decided not to support the delivery of rebar futures to achieve sales and crack down on the current behaviour of forward delivery for which a joint meeting was held on the afternoon of 10 Nov'21.

Some of the Chinese futures spot companies have used forward delivery which disrupted the current market stability of the country and severely affected the normal distribution of steel mills' cooperative agreement to their customers.

According to data maintained with SteelMint, China's SHFE rebar futures contract for Jan'22 delivery settled at RMB 4,443/t ($693/t) on 11 Nov'21, witnessing a sharp decline of RMB 217/t ($34/t), w-o-w. However, the futures witnessed a significant rebound of RMB 197/t ($31/t), on a d-o-d basis.

Domestic steel billet prices in China's Tangshan stood at RMB 4,450/t ($696/t) on 11 Nov'21, including 13% VAT, down by RMB 450/t ($70/t), w-o-w.