Blast Furnace Steel Mill Profits Expand, Construction Steel Maintenance Volume Shows a Declining Trend

According to the SMM survey, the impact from maintenance on construction steel decreased this week (6.14-6.20). There were more production resumptions and maintenance activities on construction steel rolling lines at steel mills last week and this week, resulting in an impact from maintenance on construction steel of 1.2615 million mt, a decrease of 57,500 mt WoW.

Last week, rebar prices fluctuated rangebound, and spot prices dropped slightly. In contrast, the fundamentals of raw materials such as iron ore and coke showed loose supply and average demand. Overall, the decline in cost side was greater than that in finished steel prices, leading to an expansion in the production profits of construction steel at blast furnace steel mills, and steel mills' production enthusiasm remained high. According to the SMM survey, although several steel mills in central China conducted routine maintenance shutdowns on their construction steel rolling lines this week, steel mills in east China, central China, and north China resumed production as planned, resulting in a decrease in the impact from maintenance on construction steel this week.

Looking ahead, with the continuous rainy season in south China and high temperatures in north China, the construction progress of some projects has been hindered, and the market is currently in the traditional off-season for demand. However, blast furnace steel mills still have profits of over 100 yuan, indicating strong profit resilience. Meanwhile, both in-plant inventory and social inventory are at low levels, with no significant inventory pressure from spot cargoes. To meet the rigid demand in the market, steel mills have low willingness to voluntarily cut production under these circumstances, and it is expected that the impact from maintenance on construction steel will decrease next week. Considering that some steel mills in east China are undergoing long-term phased maintenance, the decline in the impact from maintenance on construction steel will be limited.