SHANGHAI, Sep 6 (SMM) – Production of hot-rolled steel across major steelmakers in China will shrink from a month ago in September, as greater demand and recovered margins drive steelmakers to cold-rolling and as some mills will conduct maintenance.

Major Chinese steelmakers plan to produce 9.36 million mt of hot-rolled steel in September, down 3.22% from the realised output in August, showed an SMM survey.

About 481,000 mt would be exported, and this is down 23.3% from the prior month. Volumes slated to enter domestic markets are likely to fall 1.8% to 8.88 million mt.

Price spreads between cold- and hot-rolled steel widened since August, and cold-rolled steel margins recovered. Mills returned to or towards positive territory.

Orders for cold-rolled steel, meanwhile, improved greater than expected, as car and home appliance manufacturers restock in a high season in September-October.

Maintenance this month is estimated to impact hot-rolled steel production by some 260,000 mt, 15.66% greater than August, showed the SMM survey.

Baotou Steel will put its 2,250-mm hot-rolling line under maintenance for 10 days, with daily output of 12,000 mt affected. Shagang is expected to see production being impacted by 14,000 mt per day, when its 5,800- m³ blast furnace and hot-rolling line in 10-day maintenance.

New capacity is expected to contribute 235,000 mt to production, while the return to cold-rolling and maintenance works are likely to lower production by 540,000 mt.