[SMM survey] Blast furnace steel mill profits increase, maintenance volume of building materials shows a downward trend

According to the SMM survey, the impact from maintenance of building materials decreased this week (6.14-6.2). There were more production resumptions of building material rolling lines at steel mills this week compared to last week, resulting in an impact from maintenance of building materials of 1.2615 million mt, a decrease of 57,500 mt WoW.

Data source: SMM

Last week, rebar prices fluctuated rangebound, and spot prices dropped slightly. In contrast, the fundamentals of raw materials such as iron ore and coke showed loose supply and average demand. Overall, the decline in cost side was greater than that in finished product prices, leading to an increase in building material production profits at blast furnace steel mills, and steel mills' production enthusiasm remained high. According to the SMM survey, although several steel mills in central China conducted routine maintenance shutdowns of building material rolling lines this week, steel mills in east China, central China, north China, and other regions resumed production as planned, resulting in a decrease in the impact from maintenance of building materials this week.

Looking ahead, the plum rain season in south China and the high-temperature weather in north China persist, slowing down construction progress at some construction sites. The market is currently in the traditional off-season for demand. However, blast furnace steel mills still have profits of over 100 yuan, demonstrating strong profit resilience. Meanwhile, both in-plant inventory and social inventory are at low levels, with no significant inventory pressure on spot cargo. To meet the rigid demand in the market, steel mills have low willingness to voluntarily cut production under these circumstances, and it is expected that the impact from maintenance of building materials will decrease next week. Considering that some steel mills in east China are undergoing long-term phased maintenance, the decline in the impact from maintenance of building materials will be limited.

Data source: SMM