SMM Rebar Daily: Weak Profitability Leads Steel Mills to Shift Production, Prices Fluctuate

Published: Nov 18, 2024 17:55

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[SMM Rebar Daily Review: Poor Profitability in Construction Materials, Steel Mills Gradually Shift to Other Products] Today, rebar futures fluctuated and closed at 3,279 points, up by 0.06%. During the session, futures turned positive, and transactions in various regions slightly improved. However, the futures market weakened in the afternoon, and spot cargo transactions declined accordingly, with overall transactions remaining weak. As winter approaches, downstream operating rates gradually decrease, and the profitability of construction materials is poor. Steel mills are gradually reducing rebar production, with some pig iron being converted to other product types, leading to a continuous decline in supply. On the demand side, temperatures have dropped sharply, with many areas in north China and north-west China experiencing sub-zero temperatures, causing a simultaneous decline in demand. Currently, construction materials are in a situation of weak supply and demand. Looking ahead, although steel mills have initiated three rounds of coke price reductions, the cost reduction is insufficient to offset the decline in product profitability. Steel mills prioritize the production of HRC and medium-thickness plates, leaving little room for an increase in construction materials. Even if demand further weakens, inventory may gradually accumulate, and there is insufficient upward momentum for steel prices. It is expected that steel prices may fluctuate in the short term.

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