Hot-rolled steel output to dip in Nov on low margins

SHANGHAI, Nov 7 (SMM) – China’s production of hot-rolled steel looks set to continue to decline in November, as low margins drive steelmakers to more profitable products and some mills will conduct maintenance.

An SMM survey showed that Chinese steelmakers plan to produce 8.71 million mt of hot-rolled steel in November, down 0.72% from the realised output in October.

Steelmakers could see a profit of 100 yuan/mt on hot-rolled coil, but a profit of 400-600 yuan/mt on rebar, according to SMM calculations as of November 6.

The decrease is much smaller than a 3.37% drop in October, due to the production recovery from anti-smog curbs and maintenance at some major producers.

SMM research found that Baotou Steel, Anshan Steel and Wuhan Steel have fully recovered from maintenance since the end of October.

For November’s output, about 383,900 mt would be exported, and this is down 18.7% from a month earlier, given macroeconomic uncertainty and low export prices.

Export prices of hot-rolled steel stood at $427/mt as of November 6, equating to 2,992.4 yuan/mt versus over 3,500 yuan/mt in domestic markets.

Volumes slated to enter domestic markets are likely to inch up 0.3% to 8.33 million mt. This, coupled with greater inflows of foreign materials, is set to grow supply pressure domestically.

About 150,000 mt of HRC from South Korea’s Pohang Iron and Steel, and 100,000 mt from Russia are expected to arrive in China in early December.