High production enthusiasm to expand rebar output in Jul

SHANGHAI, Jul 4 (SMM) – Production enthusiasm across Chinese rebar producers remained high, as profits of the product continued to top that of other steel products and the intensified production curbs in major steelmaking cities in the north only somewhat affected rebar capacity. 

SMM assessed that rebar products accounted for only 20% of the total affected capacity in the new round of curbs in Tangshan. 

Steelmakers in the north are expected to maximise production of rebar under the current controls, with mills in other curb-free areas operating at full capacity to chase high margins. 

Maintenance planned for July across steel mills is expected to impact production of long steel, including rebar and wide rods, by 199,000 mt, considerably smaller from the affected 440,800 mt in June, showed an SMM survey on Wednesday July 3. 

News around production cuts bolstered steel prices at the start of July, and this improved margins at producers. Despite moderation after increases, prices remained at a high of 4,083 yuan/mt as of July 3, up from the average price of 3,996 yuan/mt in June. 

The average profits of rebar stood at 377 yuan/mt in the month to July 3, up from an average of 318 yuan/mt for June across steel mills with iron ore as feedstock, according to SMM calculation. 

While supply expanding, expectations of a recovery in construction demand in the south in the second half of July after rainy season will underpin steel prices. Supportive local government policies that free up financing will also boost consumption from construction, infrastructure sectors.