[SMM Hot-Rolled & Cold-Rolled Production Schedule] — Steel Mills Resume Production After Annual Maintenance & Export Volume Increases; January Hot-Rolled Production Schedule Up MoM

SMM Cold-Rolled Production Schedule: Year-End Orders Were Moderate, January Steel Mills' Cold-Rolled Production Schedule Increased Slightly * Important Notice: Starting from September 2024, SMM will officially launch cold-rolled production schedule data for 31 blast furnace steel mills, covering 100% of the sample proportion of blast furnace cold-rolled steel mills. According to the latest SMM tracking, the planned production volume of cold-rolled finished products for 31 mainstream cold-rolled steel mills in January totaled 4.423 million mt, up 51,200 mt or 1.17% from the actual production volume in December. In January, steel mills' cold-rolled order-taking was moderate, and the cold-rolled production schedule of 31 domestic steel mills increased slightly MoM. Table 1: Planned Production Volume of Cold-Rolled Finished Products for 31 Mainstream Cold-Rolled Steel Mills in January Data Source: SMM Steel SMM Hot-Rolled Production Schedule: Steel Mills Resumed Production After Maintenance & Profit Margins Slightly Better Than Rebar, January Hot-Rolled Production Increased SMM Steel, January 7: According to the latest SMM tracking, the planned production volume of hot-rolled finished products for 39 mainstream hot-rolled steel mills in January totaled 14.2431 million mt, up 706,700 mt or 5.2% from the actual production volume in December. After expanding the sample to 51 mainstream hot-rolled steel mills, the planned production volume of hot-rolled finished products in January totaled 17.4261 million mt, up 669,700 mt or 4.0% from the actual production volume in December. In January, some steel mills in north and east China resumed production after year-end maintenance, driving a rebound in hot-rolled production. Additionally, as the off-season approached, demand for construction materials declined rapidly, while manufacturing demand remained resilient. Steel mills' order-taking for cold-rolled and hot-rolled products was moderate, boosting production enthusiasm. Furthermore, steel mills actively delivered previous export orders this month. As a result, the planned production volume of hot-rolled products in January increased MoM. Chart-1: Planned Production Volume of Hot-Rolled Finished Products for New Sample Steel Mills Data Source: SMM Steel Chart-2: Regional Proportion of Planned Production Volume for Mainstream Hot-Rolled Steel Mills Nationwide Data Source: SMM Steel By Domestic and Export Trade: Domestic Trade: The planned production volume of hot-rolled coil for domestic trade in January was 12.9821 million mt, up 562,700 mt or 4.5% from the actual domestic production volume in December. As the Chinese New Year approached, demand for construction materials declined rapidly, while the decline in manufacturing demand was relatively slower. Steel mills' orders and profitability for hot-rolled coils were better than those for construction materials, prompting some mills to shift pig iron to hot-rolled production. Additionally, the resumption of production after annual maintenance at some mills contributed to the MoM increase in domestic hot-rolled production in January. Table 2: Comparison of Order-Taking for Some Steel Mills Surveyed by SMM Data Source: SMM Steel According to SMM's survey, as of January 7, domestic steel mills' order-taking for domestic trade improved MoM. The average orders held by sample steel mills increased by 23% MoM, with most mills reporting good domestic order-taking. SMM will continue to track subsequent order-taking conditions. Export Trade: The planned export volume of hot-rolled coil in January was 1.261 million mt, up 144,000 mt or 12.9% from the actual export volume in December. Many steel mills actively delivered previous orders, leading to a MoM increase in the planned export volume of hot-rolled products in January. Regarding the current situation of new orders, SMM learned that steel mills' order-taking showed some divergence. Some mills actively sought new orders to mitigate the seasonal decline in domestic orders and the uncertainty of export risks in 2025. However, some mills reported that domestic orders were relatively good, and compared to export prices, current export profits were not favorable. Their order-taking enthusiasm was moderate. It is expected that the risk of significant fluctuations in steel mills' export levels in the next two months compared to January will be relatively small. SMM will continue to monitor subsequent developments. Chart-3: Comparison of Hot-Rolled Export Prices in Major Global Markets Chart-4: Planned Export Volume of Hot-Rolled Finished Products for Mainstream Steel Mills (New Sample) Data Source: SMM Steel Maintenance: The impact from maintenance on hot-rolled production in January was temporarily 514,700 mt, down 454,800 mt MoM. Some steel mills' maintenance schedules remain undecided. SMM will continue to track the specific maintenance situation, as detailed in the table below: Table 3: Comparison of Maintenance Details for Hot-Rolled Steel Mills Data Source: SMM Steel Profitability: According to SMM's survey on steel mills' real-time profit situation for hot-rolled coil production, most steel mills' real-time profits currently range between 50-100 yuan/mt, similar to the situation in early December. Specifically, about 3% of steel mills reported current losses exceeding 100 yuan/mt; about 10% reported losses between 50-100 yuan/mt; 30% were at breakeven; 34% reported profits between 50-150 yuan/mt; and 23% reported profits exceeding 100 yuan/mt. Chart-5: Real-Time Profit Situation for Hot-Rolled Coil Production in Early December and Early January for Some Steel Mills Surveyed by SMM Summary: The planned production volume of hot-rolled products for domestic steel mills in January increased slightly MoM compared to the actual production volume in December. This was mainly due to the resumption of production after maintenance at some mills, the adjustment of pig iron to hot-rolled production driven by better profitability of hot-rolled orders compared to construction materials, and the increase in steel mills' export plans in January. Looking ahead, the supply level of hot-rolled products in January is expected to increase slightly MoM. On the demand side, as the Chinese New Year approaches, downstream procurement demand will gradually cool down, and hot-rolled inventory will reach an inventory buildup turning point. It is expected that hot-rolled prices in January will fluctuate downward, with the price center likely to shift slightly lower. Combined with the lack of macroeconomic stimulus, the price fluctuation range for hot-rolled products before the Chinese New Year is expected to narrow further.