Scheduled rebar production down 3.32% in August

SHANGHAI, Aug 12 (SMM) – Planned output of construction steel rebar across China’s major blast furnace steelmakers is estimated to fall 3.32% from the realised production in July to 8.88 million mt in August, showed an SMM survey. 

Scheduled production of wire rods is likely to rise 0.58% from the actual output in July to stand at 2.74 million mt in August.

Planned rebar output for export increased 15,000 mt from July to 110,000 mt as some Southeast Asian countries have started to reopen economies, while wire rods exports were largely unchanged from a month ago.

Planned rebar output across China’s major blast furnace steelmakers (Source: SMM)

The output of construction steels decline on poor profits.

Rebar has become the weakest performer among general steel products. As SMM calculated, rebar profit stood at 109 yuan/mt as of August 10, 233 yuan/mt lower than that of hot-rolled coil, and this drove some steel mills to shift capacity to wire rods and hot-rolled coils.

In addition, some steelmakers conducted maintenance to reduce output as high transportation fees of raw materials further narrowed rebar profits.

Maintenance at Chinese steel mills in July-August (Source: SMM)

Rebar fundamentals seem to improve as scheduled output falls as expected in August amid poor profits, and demand increases. However, demand has yet to fully recover, and output remains high despite declines. Scheduled production in August stands even 1.56% higher than the same period last year. High inventories will continue to weigh on prices.