Holiday Wave Approaches! Operating Rates at Steel Mills Using Externally Purchased Billets to Continue Pulling Back in February

Published: Jan 30, 2026 17:31

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[SMM Billet Utilization Survey] According to an SMM survey, as of January 30, the operating rate of steel mills using externally purchased billets that mainly produce construction steel stood at 24.49%, down 0.11% MoM from December but up 24.49% YoY.

In January, national construction steel prices fluctuated downward. The average spot price of rebar was 3,159 yuan/mt on January 30, down 21 yuan/mt MoM. The price reached its monthly high of 3,197 yuan/mt on January 8 and fell to the monthly low of 3,158 yuan/mt on January 28.

Cost side, recent environmental protection-related controls led to temporary production cuts at some coking plants in northern China, tightening effective coke supply. Downstream steel mills showed stronger restocking sentiment ahead of the holiday, pushing the supply-demand structure for raw materials into a tight balance. Most coking enterprises also maintained reasonably low inventory levels, supporting the successful implementation of the current coke price hike.

Supply side, operating rates at BF and EAF steel mills diverged. Most BF mills still retained slight profits, and previously idled rolling lines largely resumed production as planned, increasing construction steel output. In contrast, EAF mills reduced operating hours voluntarily due to declining margins and rising difficulty in sourcing steel scrap. As the Chinese New Year holiday neared, billet-using mills began entering holiday shutdowns, with one additional mill closing this month, contributing to the overall decline in their operating rate.

Demand side, with the Spring Festival approaching, domestic construction steel demand entered the traditional off-season. End-user construction sites progressively halted work, and downstream procurement pace slowed noticeably, leading to a clear seasonal drop in steel demand.

Overall, as the holiday approaches, downstream end-user projects will suspend operations in succession. Feedback from the end-use market indicates that most construction sites plan concentrated shutdowns in early February, causing terminal steel procurement demand to shrink gradually and actual rigid steel demand to decrease markedly. At the same time, EAF mills and billet-using mills will begin large-scale annual maintenance shutdowns, reducing industry steel supply simultaneously. The market is expected to maintain a pattern of weak supply and demand. With billet-using mills facing concentrated holidays in early February, their operating rates are projected to continue declining in February.

Steel

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