[SMM steel rolling mills operating rate in April] Profit improvement led to a slight increase in operating rate, but the upward space is limited

According to SMM research, as of April 30, the operating rates of steel rolling mills that rely on external steel billets across the country who mainly produce rebar was 25.5%, up 5.29 percentage points from the end of March and up 1.5 percentage points YoY.

In April, the spot price of national construction steel went up, among which the average price of rebar increased by 178 yuan/ton month-on-month. BF steel mills had high profit. Some blast furnaces that had been overhauled resumed production in the middle and late stages of the month. However, considering the good orders and benefits for other types of materials, the increase in pig iron returning to the building materials has not yet been prominent, and there may be a significant increase in May. In addition, EAF steel mills continued to maintain valley power production. Some regions had an advantage in steel scrap prices, with a slight profit of 30-50 yuan/ton, but most regions were still below the break-even line, and there was limited room for incremental production in the short term. Although the profits of steel rolling mills that rely on external steel billets improved slightly, they still suffered losses, so some manufacturers have not resuming production yet. Demand improved in April MoM, but considering the significant impact of weather in some areas, demand may be delayed until May. There is still room for the overall demand in May, but the sustainability of demand remains to be considered.

In the later period, before the profits of steel rolling mills further improved, the probability of large-scale production resumption at steel mills is low, and most of them will maintain a wait-and-see attitude. It is expected that the operating rate of steel rolling mill may increase in May, but the upward room will be limited.