SHANGHAI, Dec 9 (SMM) – The latest SMM survey showed that 35 steel makers in China plan to produce a total of 9.34 million mt of hot-rolled coils and plates in December, up 366,300 mt or 4% from the realised output in November.
The output of hot rolled plates and coils for domestic sales is planned to be 9.21 million mt in December, up 291,500 mt or 3% from the actual output in November. The increment will mainly come from north China and some large state-owned enterprises.
The large steel companies actively resumed production after achieving the production reduction target, while some steel mills in north and east China plan to conduct maintenance. The total increment in output will be lower than expectations.
The exports of hot rolled plates and coils are planned to be 125,500 mt, 75,000 mt or 149% higher than the actual exports in November. The prices hot-rolled products plunged in November, which boosted the exports, and the steel mills are in the peak season of export at the end of the year. The exports have rebounded after the consecutive decline in the past four months. However, the total export volume is far lower than previous year due to the policy restrictions. The exports in January 2022 still have large upward room amid increasing orders and more export quotas.
The production is planned to be ramped up significantly after the previous sharp cuts, but the actual increment will be limited amid maintenance at the end of the year. The increasing export volume will also reduce part of the domestic supply.
Taking into account the production and delivery period, the increased output of steel mills will be reflected in the market from end-December to January.
A large steel mill will reduce production in east China, and the major steel mills in south China will reduce the production for maintenance and the transform of molten iron lines. The market will not see a significant surplus in HRC supply in December, and the prices will be supported.
The supply and demand of hot-rolled products weakened simultaneously at the end of the year, and the traders suffered serious losses due to the sharp price drop in November, so they reduced the purchases. The steel mills may adjust the sales strategies amid poor shipments.
The production will increase slightly in December, and the domestic sales as well as exports are expected to rise significantly in January. However, the production of steel mills in north China is unstable due to the upcoming Beijing Winter Olympics. If the production restrictions are strict in north China, the supply will be sharply reduced, which may push up the prices in the coming spring.
