SHANGHAI, Dec 14 (SMM) – Planned output of construction steel rebar across China’s major blast furnace steelmakers is estimated to rise 1.48% from the achieved production in November to 8.1 million mt in December, showed an SMM survey.
Scheduled production of wire rods is likely to decrease 1.86% from the actual output in November to stand at 2.95 million mt in December.
The maintenance of steel mills was relatively concentrated in November, and these steel mills resumed production from maintenance in December, leading to the increase in scheduled rebar production.
Planned rebar output across China's major blast furnace steelmakers
source: SMM
Maintenance at Chinese steel mills in November-December
source: SMM
source: SMM
However, it is expected that more steel mills will turn to maintenance in the near term. When steel prices continue to rise, and iron ore has already surged - China's average prices of rebar has increased by 342.4 yuan/mt since November, and the spot price of iron ore has increased by 185 yuan/mt (accumulated). Metallugrical coke has also experienced eight rounds of increase, and the profits of steel mills have fallen.
Based on the current raw materials and finished products prices, some steel mills in most areas of China, such as Northwest, Southwest and North China, began to make losses. Steel prices are soaring, and the cautious stance of steel mills towards winter stockpiling is increasing. Considering the extreme situation that "no one stockpiles in winter at high prices ", some steel mills choose temporary maintenance as a solution to reduce the inventory pressure. Therefore, the achieved production of rebar in SMM sample steel mills in December is likely to be lower than planned output.
source: SMM
From the current situation, rebar supply remains weak but stable. On the demand side, while the demand in North China continues to weaken, demand in East China and South China remains high, with some steel mills rushing to complete work amid high demand.
The weakness of fundamentals is not obvious over the next few weeks, according to SMM steel analysts. Therefore, although there is some demand after the recent price surge and fear of high prices in the market in the near term, there is relatively limited room for downward adjustment.
