[SMM Analysis] Off-Season for Traditional Building Materials Demand Nears Its End

On the supply side this period, for the long process route, the second round of coke price increases has been settled, keeping production cost pressure on steel mills elevated. A few mills have carried out planned maintenance shutdowns on blast furnaces and their building-material rolling lines. On the short process route, thanks to greater production flexibility, finished steel prices rose more sharply than scrap prices this period, allowing many EAF (electric arc furnace) plants to turn from losses to profits on a per-tonne basis, and consequently to modestly extend their operating hours.

On the demand side, the market is currently in the transition phase between the demand off-season and peak season. After the sharp rally in building materials prices, market sentiment has improved somewhat and speculative activity has picked up, but end-user purchasing remains relatively cautious, dominated by low-price, just-in-need procurement.

According to SMM statistics, total building materials inventory stood at 8.1925 million tonnes this period, down 133,400 tonnes or 1.6% from the previous period. The pace of building materials destocking has slowed, mainly because shipping restrictions in parts of Zhejiang have ended, leading to a concentrated arrival of building materials at ports. Both mill inventories and social inventories declined to varying degrees, with some stock also shifting from mill warehouses to social warehouses.