[SMM survey] How much impact from maintenance will building materials production face amid adjustments in product mix and reduction in crude steel output?

According to the SMM survey, the impact from maintenance of building materials production lines increased this week (6.7-6.13). Last week, several steel mills began maintenance on their building materials rolling lines, and this maintenance status continued this week. The impact from maintenance of building materials production lines reached 1.2795 million mt, an increase of 49,600 mt WoW.

Source: SMM

Last week, rebar prices first declined and then rebounded, with spot prices dropping slightly. Meanwhile, the third round of coke price cuts was implemented, and raw material costs continued to decline. Most blast furnace steel mills still maintained a profit margin of around 100 yuan per mt. However, as south China entered the plum rain season and north China experienced persistent high temperatures, the construction progress at downstream sites was restricted, and the procurement pace slowed down slightly. Market transactions were average, and steel mills' production enthusiasm was limited. In contrast, orders for billet, special steel, and plate and strip were good. At the same time, the profit margins for these products were slightly better than those for rebar. Steel mills diverted pig iron from building materials production to other product lines. Steel mills in east, north, and central China halted production and conducted maintenance on their building materials rolling lines. Meanwhile, the policy to reduce crude steel production was gradually implemented. Steel mills in east China planned to halt blast furnaces and cut building materials production, leading to an increase in the impact from maintenance of building materials production lines this week.

Looking ahead, rebar inventory is currently at a low level compared to the same period in recent years, with limited room for further reduction. To meet the rigid demand in the market, steel mills will adjust production volumes among different product lines, and the duration of production cuts for building materials rolling lines will be limited. According to the SMM survey, steel mills in central and east China plan to resume production on their building materials rolling lines this week and next week. It is expected that the impact from maintenance of building materials production lines will decrease next week.

Source: SMM