China's rebar market collapsed further last week, forcing mills to cut production to defend margins.

In Shanghai on Friday afternoon, 20mm HRB400 rebar was trading at CNY 3,880-3,900/tonne ($566-569/t), down by another CNY 100/t on-week. The May 2023 rebar contract on the Shanghai Futures Exchange closed at CNY 3,896/t, up by CNY 10/t compared with Thursday but still down CNY 93/t from a week before.

Last week, rebar transactions in eastern China hovered in a trough due to weak market demand. Prices kept falling as traders tried to sustain buying momentum, Kallanish notes. Market trends picked up on Friday, with several steel mills announcing production cuts to reduce supply pressure. That boosted expectations among futures and spot market participants, with prices recovering slightly on Friday to show improving sentiment.

According to the latest data from the China Iron & Steel Association, the crude steel output of key steel enterprises of CISA members continued to grow in early April and hit a new high since late April last year. The ever-increasing output suppressed prices, and only now is production starting to pull back.

Market participants have no confidence in demand in the rest of April, and they expect the market to be "flat" from May to June. "Let's see the rebound in the second half of the year," said a Shanghai trader.