SHANGHAI, May 28 (SMM) – Hot-rolled coil prices have been falling faster recently, with hot-rolled coil prices down RMB 200/mt in May, while prices for rebar and wire & rod were down RMB 100/mt. Prices for hot-rolled coils and rebar delivered to Shanghai were RMB 3,400/mt. Hot-rolled coil prices in Lecong were already RMB 100/mt lower than rebar prices in Guangxi.
As costs for hot-rolled coil are RMB 100-150/mt higher than those for rebar and steel wire & rod, steel mills started adjusting production with hot-rolled coil prices lower or flat at rebar prices. Liuzhou I/S resumed its rebar and steel wire & rod production this week, and cut production plan of hot-rolled coil. Rizhao I/S conducted maintenance to hot-rolling units, and cut hot-rolled steel output while raising output of steel wire and rod.
As the average daily crude steel output remained high at 2.18 million mt during mid-May, steel mills chose to adjust production to maximize their profits. In this context, many mills will cut hot-rolled coil production due to its low profits, and oversupply in hot-rolled coil market will be somewhat eased. However, as mills ramped up cold-rolling and galvanizing production, prices of these products will come under downward pressure.