Central China building materials has significantly reduced its production, and steel mills are expected to be pessimistic? [SMM Survey]

During the survey period (February 13-February 19), the operating rate and capacity utilization rate of the building materials production line of central China steel plant this week dropped compared with before CNY holiday. The total inventory of the steel plant in this period was 547,000 mt, accumulating to a high level during the year. During the survey period (February 13-February 19), the operating rate and capacity utilization rate of the building materials production line of central China steel plant this week dropped compared with before CNY holiday. The total inventory of the steel plant in this period was 547,000 mt, accumulating to a high level during the year.

The rebar rolling line operating rate and output in central China this week declined compared with before CNY holiday. Specifically: in terms of EF, electric furnace steel plants in Henan and Hubei stopped production before the holidays and basically resumed work around Feb 24. Production has not recovered in this period; in terms of BF, affected by the market, some Hubei steel plants added new rolling lines maintenance and are expected to resume work in March; due to heavy inventory pressure, some steel mills in Henan have added new rebar rolling lines for maintenance. In terms of factory inventory, market transactions were stagnant during the CNY holiday, and more downstream operations started after Feb 24. Inventories continued to accumulate to high levels. Then, with the onset of cold wave weather in the later period, market demand may be limited, and factory inventory may continue to accumulate.

It is expected that rebar production in central China will continue to decline next week. The impact of the rolling line maintenance at Hubei steel plants has not been shown in this period, and the reduction will be obvious in the next period. A steel plant in Henan has switched from rebar to coiled rebar production, leading to an expected reduction in output.

The wire rod operating rate and output in central China continued to decrease this week compared with before the holiday. Specifically: some steel mills in Hubei have taken the initiative to suspend production due to market conditions, and their output has been slightly restricted. Secondly, electric furnace plants have not resumed production yet, and their output has remained low. In terms of factory inventory, the market is sluggish during the festival, and steel mill inventories continue to accumulate.

It is expected that the output of wire rods in central China may rebound slightly next week, mainly because a steel plant in Henan has switched from rebar production to coiled rebar, and in the next period, electric furnace steel plants in the region have plans to resume production, which may boost output.