[SMM Hot Topic] Reviewing Those Years: How Much Production of Construction Materials Was Transferred to HRC?

• Over the past two years, construction steel production decreased by nearly 15%, while HRC production increased by approximately 6%.

In recent years, the downturn in the real estate sector, along with structural changes and development trends in the steel industry, has undoubtedly been the fundamental reason for significant changes in the production of different types of steel.

Source: SMM

SMMThe long-term tracking of steel mill production schedules by SMM monitors newly commissioned capacity and dynamically expands the sample size. According to SMM production schedule data:

In 2024, domestic HRC production is expected to reach 191.68 million mt, up 5.87% YoY compared to 2023;

domestic construction steel production is expected to reach 151.34 million mt, down 14.34% YoY compared to 2023, with rebar production down 15.66% and wire rod production down 10.54%.

Over the two years, domestic construction steel production decreased by approximately 25 million mt, while HRC production increased by about 11 million mt.

In addition to some production being shifted to HRC, other steel products such as cold-rolled steel and medium-thickness plates, which represent the robust demand from the automotive, home appliance, shipbuilding, and machinery manufacturing sectors, also absorbed part of the production shifted from construction steel.

According to NBS data, from 2020 to 2024, major construction steel production decreased by approximately 24%, while major sheet & plate production, including HRC and cold-rolled steel, increased by nearly 25%.

Source: National Bureau of Statistics (NBS)

• 2025-2026, sheet & plate production is expected to have further growth potential.

According to the SMM survey, from 2025 to 2026, 14 new HRC production lines are expected to be commissioned domestically, involving a capacity of nearly 40 million mt. For cold-rolled steel, 2 new production lines are expected to be commissioned in 2025, involving a capacity of approximately 3 million mt. It is expected that, before the real estate sector demand bottoms out and rebounds, the rapid development of the manufacturing sector will continue to drive further growth in sheet & plate production.

At the recently concluded 7th meeting of the 6th session of the China Iron and Steel Association, Yao Lin, President of the Association and Party Secretary and Chairman of China Mineral Resources Group, stated that the main imbalance in industry operations in 2025 will be abundant total supply capacity and weakening demand intensity. A new dynamic supply-demand balance mechanism has yet to be established, making it very challenging to stabilize operations and increase profitability. The imbalance of overcapacity in the steel industry is gradually intensifying, and how to avoid ineffective cut-throat competition will be the biggest challenge facing everyone in the steel industry...