Scheduled rebar production roughly flat in April as maintenance offsets output increase

SHANGHAI, Apr 13 (SMM) – Planned output of construction steel rebar across China’s major blast furnace steelmakers in April stood roughly flat from the actual production in March, as the impact of maintenance may offset the increase in output driven by higher profits. 

An SMM survey showed that the scheduled rebar production for April edged up 0.17% from the realised output in March, to 7.72 million mt, with the amount for domestic trades rising 0.58% on the month.

Scheduled production of wire rods in April, meanwhile, expanded 7.5%, or 145,000 mt, from the actual output last month, with the amount for domestic sales 8.6% higher. 

Amid inventory pressure and cash flow burden, steel mills, in Northeast, East and Central South China in particular, planned to cut production of finished steel by reducing the usage of steel scrap or putting facilities into maintenance. 

According to steelmakers maintenance schedule released as of April 10, planned overhaul across steelmakers in China is likely to reduce long steel production by 754,800 mt in April, 121,200 mt higher than the affected volumes in March.

Meanwhile, higher profit margins of rebar will prompt some steel plants, especially producers in North China, to shift capacity to rebar at the expense of wire rods, steel plate and coil. SMM assessed that rebar profits at blast furnace steelmakers stood 250 yuan/mt higher than that of profits of hot-rolled coil as of April 10. Most steel mills reported losses in producing hot-rolled coil. 

SMM expects rebar supply to continue to expand in the short term, but the upward room in the growth will be limited as most blast furnace and electric arc furnace (EAF) steelmakers are running close to full capacity in the chase of profits.