How are construction steel mills coping with the transition to off-season?

According to SMM research, the maintenance impact volume of construction steel this week (May 24 - May 30) continued to increase. Many steel mills' blast furnaces and rolling lines were under scheduled extended maintenance this week, with the maintenance impact volume of construction steel reaching 1.172 million tons, an increase of 34,000 tons compared to last week.

Recently, as the heat of China-US tariff trade has faded and the demand in the construction industry continues to weaken, the prices of raw materials and finished products have fallen to varying degrees. The decline in finished product prices is greater than that in the cost side, shrinking the profit margin of rebar production and affecting steel mills' production enthusiasm. According to SMM research, individual steel mills in the southwest region have postponed the resumption time of blast furnace maintenance, and some steel mills in the east China region have continued to shut down rolling lines this week, leading to a slight increase in the maintenance volume of construction steel this week.

Looking ahead, the current downstream demand is in the traditional "off-season to peak season" transition stage. The wheat harvest in the north has gradually started, the construction progress of the industry is slow, and the procurement rhythm has slowed down. It is expected that the spot price of construction steel will be under pressure in the short term. However, considering the approaching Dragon Boat Festival, it is not excluded that there may be periodic stocking behavior in terminal demand, driving prices to stop falling and rebound. The prices of iron ore and coke at the cost end may tend to weaken, and it is expected that the gross profit of steel mills will still fluctuate around 100 yuan. According to SMM research, most steel mills maintain a normal production rhythm. Only two steel mills in the northwest region plan to carry out blast furnace maintenance in June, resulting in a decline in iron output and the shutdown of construction steel rolling lines. In addition, due to the long-term periodic shutdown of rolling lines by some steel mills in east China, it is expected that the maintenance impact volume of construction steel next week will not change much compared to this week.