Steel Mills Kept Trader Purchase High, Production Cuts Unlikely in Short Term

SHANGHAI, Apr. 26 (SMM) – Mainstream hot-rolled steel mills gradually released the proportion of purchase for traders in May after the announcement of ex-works prices. Market hopes steel mills will cut production to balance the supply and demand.

 

Steelease has learned that the purchase proportion for May is 100% at Ansteel, 90% at Benxi I/S, 90% at Beitai I/S, 100% at Ningbo I/S, 90% at Shagang, and 90% at Shougang. 

 

Shougang will start maintenance to its 1580 production line this month, and Rizhao I/S also planned to undertake maintenance to 2180 production units in May which is expected to last for 15-20 days. As ex-works prices for May are mainly around RMB 3,800/mt, with prices of Rizhao I/S lower at RMB 3,600/mt, mills leaving profits of RMB 100-200/mt for them in May. Thus, steel mills will unlikely cut production sharply in May, and market will still be under oversupply pressure.