【SMM Analysis】Construction Steel Fundamentals Continue to Recover This Period

On the supply side, long-process and short-process production continued to diverge this period. Long-process steel mills face elevated production costs, with per-ton steel profitability persistently in loss; some mills have cut production load or extended their maintenance plans on construction steel rolling lines. By contrast, some EAF mills reported that scrap collection has become less difficult and that per-ton profitability has mostly stayed above the break-even line, keeping production enthusiasm high, with a few EAF mills resuming production as planned or increasing operating hours.

On the demand side, costs provided a floor for construction steel spot and futures prices, and trading sentiment recovered somewhat. Combined with the imminent Mid-Autumn Festival and National Day holidays, pre-holiday restocking has begun in the market, with downstream buyers increasingly purchasing at low prices, and demand has continued to grow.

According to SMM statistics, both mill stocks and social stocks of construction steel destocked to varying degrees this period. Total construction steel inventory came in at 7.6467 million tons, down 0.2259 million tons period-on-period, or -2.87% period-on-period, with the destocking pace accelerating.