Steelmakers plan to overhaul cold rolling lines and raise HRC output for its higher profits

SHANGHAI, Aug 25 (SMM) — Bengang plans to overhaul its production line of 2,230 mm cold-rolled coils for 10 days from August 25 and will resume operations on September 5, and this is expected to reduce cold-rolled galvanising output by 140,000 mt, SMM learned. In addition, Masteel also plans to put its cold rolling lines under maintenance, which will cut cold-rolled coil output by about 150,000 mt.   

As profits of hot-rolled coil (HRC) were higher than those of other steel products, steelmakers that cut cold-rolled coil output will increase HRC output, which is expected to weigh on spot HRC prices.

Hot-rolled coils and plates inventories across steelmakers and social warehouses totalled 3.9 million mt in the week ended August 20, down 0.86% on the week, but up 14.23% on the year. New maintenance at some steelmakers led to the weekly fall in HRC output.

Demand for HRCs was weak as narrowed profits of end-users due to the hot weather prompted them to purchase only as required. But end-user demand is expected to recover after the hot weather ends.

High profits drove HRC makers to shorten maintenance period and output is likely to rebound after they recover from maintenance, which will pressure spot HRC prices. But demand is expected to improve after the hot weather comes to an end, and this, coupled with high iron ore prices and rising coke prices, will underpin HRC prices.