[SMM Hot-rolled & Cold-rolled Production Schedule]——The daily average production schedule for hot-rolled and cold-rolled products in May pulled back MoM!

• SMM Cold-rolled Production Schedule: Increasing Pressure from Orders & Profitability; Month-on-Month Decline in Cold-rolled Production Schedule of Steel Mills in May

According to the latest tracking by SMM, the planned production volume of cold-rolled commercial materials for 31 mainstream steel mills producing cold-rolled sheet and coil in May totaled 4.3248 million mt, a decrease of 128,700 mt compared to the actual production volume of cold-rolled commercial materials in April, representing a decline of 2.89%. On a daily average basis, there was one more day in May than in April, with a daily average planned production volume of 139,500 mt, down 6.02% MoM from the actual daily average production volume in April.

• SMM HRC Production Schedule: Some Steel Mills Add Maintenance, HRC Production Schedule in April Drops Back Slightly

According to the latest tracking by SMM, the planned production volume of HRC commodity materials for 39 mainstream steel mills in May totaled 14.1287 million mt, up 55,800 mt or 0.4% from the actual production volume of HRC commodity materials in April. On a daily average basis, there was one more day in May than in April. The planned daily average production volume of HRC commodity materials in May was 455,800 mt, down 13,300 mt or 2.8% from the actual daily average production volume of HRC commodity materials in April.

This month, the planned production volume of HRC commodity materials for 52 mainstream steel mills (after SMM expanded its sample) totaled 17.4987 million mt, with the daily average planned production volume up 0.8% from the actual production volume in April. In mid-to-late April, the profits of steel mills from producing hot-rolled and cold-rolled products pulled back slightly on a MoM basis. Coupled with the upcoming off-season for downstream consumption, some steel mills were cautious about the market outlook in the future, and their enthusiasm for increasing production was generally low. In addition, some steel mills announced new maintenance schedules, causing the daily average production schedule of hot-rolled and cold-rolled products in May to decline on a MoM basis.

Breakdown by domestic and export trade:
Domestic trade: In May, the production schedule for domestic HRC was 12.9627 million mt, with a daily average of 418,200 mt. This represented a decrease of 13,300 mt, or 3.1%, compared to the actual daily average domestic production in April. In May, some steel mills announced new maintenance schedules, and with the off-season for downstream demand approaching, steel mills were reluctant to increase production. As a result, the domestic HRC production schedule in May decreased MoM.

According to the SMM survey, as of May 8, most sampled steel mills had already received full domestic trade orders. The domestic trade order intake for HRC at steel mills this month was moderate, with the impact of the off-season not yet apparent. However, some steel mills had voluntarily controlled their order intake due to production cuts. Additionally, the pressure on cold-rolled order intake at some steel mills had further increased. SMM will continue to monitor the subsequent order intake situation.

Foreign trade: The planned HRC exports for May were 1.166 million mt, an increase of 36,000 mt compared to the actual exports in April, representing a MoM increase of 3.2%. The planned HRC exports for May at domestic steel mills fluctuated relatively small compared to the actual exports in April. With the ongoing escalation of the tariff war, many enterprises were actively developing other markets. According to the SMM survey, many steel mills had already received full export shipment orders for May around mid-to-late April, and the exports at steel mills in May were expected to remain at a relatively high level.

In terms of maintenance, the impact from hot-rolled coil maintenance in May is temporarily 784,200 mt, up 38,900 mt MoM from the previous month. The announced maintenance activities are mainly concentrated in steel mills in east China, north China, and western regions. SMM will continue to monitor the subsequent situation.

Summary: In May, the daily average planned production of hot-rolled coil (HRC) by domestic steel mills decreased slightly on a MoM basis compared to the actual production in April. On the one hand, some steel mills conducted maintenance on newly added equipment. In addition, as the downstream consumption off-season was approaching, most steel mills had low willingness to increase production.

Looking ahead, in terms of demand, entering May, downstream demand will be impacted by the off-season to a certain extent. It is expected that the apparent demand for HRC will pull back MoM in May. In terms of supply, the production schedule for HRC in May decreased slightly MoM compared to April, slightly better than previously expected. Overall, entering the off-season, downstream demand will decline slowly. Coupled with the fact that the Sino-US tariff negotiations are expected to remain inconclusive in the short term, and rumors of production restrictions on the domestic supply side have been fermenting periodically, uncertainties in the macro and industrial news have increased. It is expected that HRC prices will continue to face downward pressure in the short term. During the process of verifying off-season demand, if there is a lack of favourable macro front to drive the market, there is room for HRC prices to decline further.