Both Rebar Futures and Spot Prices Fall – How Long Can the Production Enthusiasm of BF Steel Mills Last?

According to SMM's survey, the maintenance impact volume of construction steel this week (May 31 - June 6) saw a slight increase. Most steel mills continued their maintenance from last week, and some steel mills added new rolling line maintenance plans. The maintenance impact volume of construction steel was 1.1984 million tons, a month - on - month increase of 0.041 million tons.

After breaking through the 3000 - point mark last week, the rebar futures price continued to fluctuate downward without obvious signs of rebound, leading to insufficient market confidence and the continuous weakening of spot prices. Meanwhile, the prices of coke and iron ore also fell. According to SMM's calculation, the profits of BF steel mills in East China still remain at about 100 yuan, so their production enthusiasm is still strong. However, the profit levels in other regions are lower than those in East China, among which the efficiency in the Northwest region is relatively poor, and the production enthusiasm of steel mills has weakened. According to SMM's survey, the increase this week is concentrated in the Northwest region. Individual steel mills shut down and maintained two bar rolling lines and one wire rod rolling line, resulting in a slight increase in the maintenance volume of construction steel this week.

Looking ahead, the plum rain and high - temperature weather are increasing, and the college entrance examination and senior high school entrance examination are approaching, which further hinders the construction progress of the downstream construction industry. The traditional off - season for construction steel demand has arrived, and the short - term support for spot prices is weak. At the cost end, the expectation of the third round of coke price decline still exists, and the iron ore price may run weakly and stably. It is expected that the gross profit of BF steel mills will have a downward space, but the decline is limited, and most steel mills will maintain the previous production rhythm. According to SMM's current survey, the maintenance of steel mills in the Southwest and Central China regions has been gradually resumed, and the total maintenance volume of construction steel has decreased. However, considering that some steel mills in East China have long - term phased shutdowns of rolling lines, and Shandong steel mills are responding to the crude steel production reduction policy by gradually adjusting their annual production plans, the construction steel rolling lines may experience shutdowns and situations of waiting for materials in turn. It is expected that the decline in the maintenance impact volume of construction steel next week will be limited.