SHANGHAI, Jun 5 (SMM) – SMM retains a pessimistic outlook on steel prices in June as supplies will expand further with fewer steel mills enter maintenance this month.
Maintenance is expected to affect the output of long steel, including rebar and wire rods, by 218,000 mt in June, down from 177,800 mt in May, an SMM survey found on Tuesday June 4.
Most steel plants that underwent maintenance last month have restarted, and only five mills have plans for overhaul in June. Some mill in Tangshan planned to resume blast furnaces as the local government eased curbs in June.
Profits continued to keep a number of steelmakers producing under full capacity. As of Thursday May 30, SMM assessed that rebar profits at blast furnace producers stood at 500-600 yuan/mt. EAF producers still see profits of 50-150 yuan/mt, despite moderation.
Fundamentals started to weigh on spot prices of rebar from the end of April. As of June 4, the eastern and southwestern markets witnessed declines of 200-280 yuan/mt in rebar prices, compared with that after the Chinese New Year holiday.
While steel mills in the north still report firm downstream consumption, demand in the south will weaken as the rainy season sets in and affects construction works.
However, declines in spot prices are likely to slow as prices already fell to lows.
As of June 5, offers of spot rebar came in at 3,970 yuan/mt in Shanghai, and at 4,030 yuan/mt in Hangzhou, an SMM survey showed.