SHANGHAI, Jul 13 (SMM) – Planned output of construction steel rebar across China’s major blast furnace steelmakers in July decreased as expected, by 2% from the realised production in June to 9.07 million mt, showed an SMM survey.
Scheduled production of wire rods in July, meanwhile, rebounded 0.67% from the actual output in June to stand at 2.69 million mt.
The amount of planned output, including rebar and wire rods, for export, was roughly unchanged from a month ago, on the backdrop of high prices in the domestic market as the global spread of the coronavirus has not been contained effectively.
Planned rebar output across China’s major blast furnace steelmakers (Source: SMM)
SMM survey showed that scheduled production of rebar at steel mills in north (+4.12%), north-west (+4.59%) and north-east China (+0.65%) continued to expand, as the impact of wet season on steel consumption was relatively weak.
Healthy demand from end-users has facilitated shipments at sellers in the northern Chinese market, which saw prices higher than that in the southern market. Decent profits, together with eased inventory pressure, bolstered production.
SMM assessed benchmark prices of rebar by Hesteel Group at 3,700-3,720 yuan/mt in Beijing as of July 10, as compared with prices of 3,660-3,670 yuan/mt in Hangzhou by Shagang Group. In 2019, the average rebar price by Shagang in Hangzhou was 153.7 yuan/mt higher than the corresponding price in Beijing.
Planned output across steelmakers in central south (-9.57%) and east China (-2.96%), meanwhile, was lower as the rainy weather deterred construction and disrupted shipments. Profit and inventory issues have prompted some steel mills to shift capacity to plate/coil, section material and strip steel, from rebar, whose profits received a greater impact from seasonality.
Note: The information is based on steelmakers maintenance schedule released as of July 10. Steel mills marked in light blue have concluded maintenance and restarted production.
SMM expects rebar supply in the near term to hold largely stable as profits of rebar as compared with other steel products may unlikely to change much. The lingering rainy season in some Chinese regions will prevent a significant rebound in end-users demand. Spot rebar prices in areas that see the fading impact of the rainfall may extend increases in the near term.
