[SMM Survey] Rolling Mills Shut Down Due to Poor Profitability, Rebar and Wire Rod Supply Declined Simultaneously

During the survey period (April 21–April 27), both the rebar rolling line operating rate and capacity utilization rate in the Central China region declined.

Specifically, some electric furnace mills in Hubei reduced operating hours and simultaneously halted rolling lines due to poor recent profitability. Meanwhile, some steel mills in Henan chose to cut rebar output and shift to hot-rolled coil production, as hot-rolled coil profitability outperformed rebar. Under these combined effects, rebar supply decreased this week. On the mill inventory side, during the survey period, futures trended upward continuously, market trading activity was moderate, and with the Labour Day holiday approaching, some pre-holiday stockpiling demand was released, leading to continued inventory destocking at steel mills.

Rebar supply in the Central China region is expected to decline further in the next period, mainly because some steel mills in Hubei shut down one rebar rolling line during the current period, and the number of operating days in the next period will be fewer than the current period, resulting in a decrease in capacity utilization rate.

During the survey period (April 21–April 27), both the operating rate and capacity utilization rate of wire rod rolling lines in the Central China region declined.

Specifically, during the survey period, some steel mills in Henan shifted production to sheets & plates to reduce wire rod production driven by profitability, while some electric furnace mills in Hubei saw declining profitability and chose to shut down one wire rod rolling line. Under the combined impact, wire rod supply in the region shifted from increasing to decreasing. On the mill inventory side, during the survey period, rebar futures showed an upward trend, regional wire rod shipments improved, and inventory continued to decline.

It is expected that wire rod rolling line supply in the Central China region will still see a slight decrease in the next period, mainly because one wire rod rolling line was shut down in the current period, and the number of operating days in the next period will be fewer than in the current period, leading to a decline in capacity utilization rate.