Scheduled rebar production down 4.19% in September, high inventories and poor demand to limit upward space for steel prices

SHANGHAI, Sep 11 (SMM)—Planned output of construction steel rebar across China’s major blast furnace steelmakers in September decreased 4.19% from the realised production in August to 8.45 million mt, showed an SMM survey.

Scheduled production of wire rods in September, meanwhile, declined 1.39% from the actual output in August to stand at 2.69 million mt.

The amount of planned rebar output for export was largely unchanged on the month, while that of wire rods increased 20,000 mt from a month ago.

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

Maintenance at Chinese steelmakers in Aug-Sep (Unit: 10,000 mt, source: SMM) 

Note: The information is based on steelmakers maintenance schedule released as of September 10. Steel mills marked in light blue have concluded maintenance and restarted production.

Rebar output has shrank for three consecutive months as profits narrowed. Steel mills have started to use the $130/mt iron ore, and coke plants have finished the second round of price increase, while the highly anticipated demand improvement failed to meet expectations due to the cash flow and weather issues. Therefore, steel prices only increased by 30-40 yuan/mt in early September.

However, overall rebar output was much higher than a year ago. Crude steel output in late August across key steelmakers rose 7.16% on the month, and output of steel products even jumped 10.04% year on year, according to data from China Iron and Steel Association.  

Besides, current rebar inventories were about 50% higher than a year ago, suggesting a great supply pressure, while demand fell short of expectations, which will limit the increase in spot rebar prices.