Chinese steelmakers to continue cold-rolled production cuts in May

SHANGHAI, Apr 21 (SMM) – A number of steelmakers in China plan to continue or even deepen production cuts of cold-rolled steel in the coming month as demand fails to pick up amid the global spread of the coronavirus pandemic.

Those mills include Angang in northeast China, Baotou Steel and Handan Steel in the north, Shandong Steel in the east, Masteel and Wuhan Steel in the central and Panzhihua Steel in the southwest.

With global anti-virus containment measures taking a toll on home appliances and auto sectors, orders for cold-rolled steel products weakened sharply and spot prices of such steel products tumbled, pushing mills into losses and narrowing the premiums over hot-rolled steel products.

In April, steelmakers in China chose to slash production of cold-rolled steel and increase production of hot-rolled products to avoid losses. SMM calculations showed that more than 400,000 mt of cold-rolled steel products output in China is estimated to be wiped out in April due to maintenance or production cuts.

When it comes to May, some mills will recover hot-rolled steel output from maintenance, and the output increase is expected to reach 300,000-400,000 mt. This, coupled with potential switches from cold-rolled steel, points to greater supply pressure on spot prices of hot-rolled steel products.