SGX’s Mysteel Shanghai Rebar (USD) Futures

On 31 Oct 2022, SGX launched Shanghai Rebar Futures, the futures are currently the only international contract based on China’s domestic reference prices in SGX. Other products from the exchange include the energy metal futures launched on September 26. Apart from its unique offering, the rebar futures also offer robust arbitrage opportunities, margin offset benefits, or price discovery for global participants.

To begin, rebar is reinforced steel that is used to strengthen structures or as a tension device.  It is separated into many types such as carbon fiber rebar and grades depending on the country’s standards.   

In recent times, rebar is increasingly used in building construction, and it serves as a crucial material for highways, railways, bridges, culverts, tunnels, and many other facilities. This has increased demand.

Hence, to clarify this new product launch, this article will provide information regarding the product, current market statistics as well as contract specifications.  

Types of Rebar

Among the different types of rebars, Shanghai rebar futures uses the Chinese Standard as indicated in point (ii) below:

(i) British Standard (BS4449)

Classified as Type 1 and Type 2, it is graded by the gripping capacity of the product.
 

(ii) Chinese Standard (GB1499.2-2018)

Classified as three grades based on their yield strength. There are also two main types, common HRB and fine-grained, these are indicated in the letters “HRB” or “HRBF”, followed by the yield strength indicated by a number and anti-seismic property indicated by the letter “E”.

 

(iii) Japanese Industrial Standard (JISG3112)

Classified as five types based on their comprehensive properties or applications.

 

SGX Mysteel Shanghai Rebar (USD) Futures Contract Specifications

Shanghai Rebar provides an important gauge for China’s steel market and serves as a benchmark for the industry worldwide.

The SGX Mysteel Shanghai Rebar contract has the following specifications:

The contract size for Shanghai Rebar is 10 metric tons multiplied by the Contract price, with a minimum price fluctuation of 0.25 of a United States dollar, equivalent to two and a half (2.5) United States dollars per Contract.

Trading Hours are from Monday to Friday, at these trading hours:

Negotiated Large Trade
7:10am – 8:00pm (T-session)
Session 8.00.01pm – 4.45am (T+1 Session)
7:10 am – 8:00 pm (Last Trading Day)

Screen
7:25am – 8:00pm (T-session)
8:15pm – 5.15am (T+1 Session)
7.25am – 8:00pm (Last Trading Day)

 

Rebar Demand and Supply

Rebar Demand

Based on research and information from Mysteel, Rebar sales through trading markets account for up to 70 – 80% of total rebar sales among member mills, it is highly sensitive to infrastructure investment due to its use as construction materials. Mysteel has also studied the demand of the market and determined that there is a close correlation between rebar supplies and fixed asset investment (FAI) since 2005, and that is also a critical indicator for Rebar demand.

Alternatively, China’s rebar market is also seasonal, with companies experiencing a peak after Chinese New Year due to the anticipated rise in total demand in the spring. However, such price rises are subjected to changes based on market conditions. Among the different regions, East China is the most dominant producer and consumer of rebar production, accounting for up to 1/3 of total output.
 

Rebar Supply

Moreover, Mysteel has also summarised the rebar supply trends from the past years.

From 2000 to 2007, steel output grew significantly because of China’s rapidly expanding property development sector. This is followed by China’s stimulus spending in 2008 to bolster consumption and stabilize the economy amidst the financial crisis.  Concurrently, supply-side reforms in 2016 pushed the finished steel production to a new record high in 2020.

Over the past decade, China’s rebar supplies have seen a “V” shaped rebound, reaching an all-time high in 2021, yet, with mandated productions cuts imposed in 2021, crude steel output has begun to fall and rebar production fell by 5.79% to 252.063 million tonnes that year.

Based on estimates by Mysteel survey, the total annual capacity of China’s rebar producers is at 400 million tonnes located, while SPglobal reports that China currently has about 350 million mt/year of HRC production capacity, according to some market sources.
 

Where To trade Mysteel Shanghai Rebar Futures

Trading Mysteel Shanghai Rebar Futures is important as it completes the SGX Virtual Steel Mill. With this new product, the traction in steel feedstocks will continue to garner support from the industry and traders around the world.

As with other products, to access Mysteel Shanghai Rebar Futures, clients can open an account with Orient Futures Singapore. Upon clearance, clients will have direct market access to the above futures contracts, contact us here to start trading today.  
 

Market News

SGX records a strong correlation between Mysteel Shanghai Rebar Index prices and SHFE Steel Rebar prices of around 96%, moreover, the differences in the pricing mechanism between SGX’s and SHFE Steel rebar contracts will allow for arbitrage opportunities. 

On the other hand, based on statistics from Trading Economics, steel rebar futures fell to CNY 3,700 per tonne in the third week of October, the lowest in over 23 months, as worsening recession fears continued to pressure demand for base metals.

 

Start Trading With Orient Futures Singapore 

Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.

Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG).

We provide premium customer service at an affordable cost to all our clients. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.