Adjustment of Production Varieties Combined with Crude Steel Production Cuts: What is the Impact of Construction Steel Maintenance?

According to the SMM survey, the impact from maintenance of construction steel increased this week (6.7-6.13). Last week, several steel mills began maintenance on their construction steel rolling lines, and this maintenance status continued this week. The impact from maintenance of construction steel reached 1.2795 million mt, up 49,600 mt WoW.
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, allowing most blast furnace steel mills to maintain 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 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 that of rebar. Steel mills diverted pig iron from construction steel production to other products. Some steel mills in east, north, and central China halted production on their construction steel rolling lines for maintenance. Meanwhile, the policy to reduce crude steel production was gradually implemented, with some steel mills in east China planning to halt blast furnaces and cut construction steel production, leading to an increase in the impact from maintenance of construction steel 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 market demand, steel mills are adjusting production volumes among different products, and the duration of production cuts for construction steel rolling lines is limited. According to the SMM survey, some steel mills in central and east China plan to resume production on their construction steel rolling lines this week and next week. It is expected that the impact from maintenance of construction steel will decrease next week.