Chinese rebar prices hit their lowest point last Friday since 3 April 2020.

In Shanghai on Friday afternoon, 20mm HRB400 rebar was trading at CNY 3,340-3,360/tonne ($473-476/t), down by CNY 195/t on-week. The October 2023 rebar contract on the Shanghai Futures Exchange closed at CNY 3,493/t, up by CNY 61/t compared with Thursday but CNY 152/t lower from the week before.

Rebar transaction prices in the spot market have actually maintained a sharp downward trend almost every week since mid-March. Kallanish has observed a cumulative CNY 820/t price decline in the period from 17 March to 26 May 2023.

Weak demand, excess production, less-than-expected policy and economic stimulus, and unconfident market traders are all part of the story. Steel mills have tried to save the market by reducing production, but eventually succumbed to profits and resumed production quickly.

Instead, market rumours led to an adjustment in the futures market on Friday. The Chinese government was rumoured to be issuing CNY 5 trillion "special government bonds" to stimulate economic recovery, which created support for the financial market and commodity sectors. However, the vast majority of market participants believe this is just another round of hype in the market.