[SMM survey] Rebar prices rise while plate prices fall. What are the reasons for the divergence in the trend of rolling lines in Central China?

Operating Rates and Forecasts for Building Materials Production Lines at Steel Mills in Central China

During the survey period (June 17-23), the operating rate and capacity utilization rate of rebar rolling lines in Central China both increased; the weekly production of wire rod decreased MoM.

Source: SMM

During the survey period (June 17-23), the capacity utilization rate of rebar rolling lines in Central China slightly increased.

Specifically, during this period, some steel mills in Henan province chose to halt rebar rolling lines and switch to producing wide and heavy plates due to better profits from certain steel products, leading to a slight decrease in supply. However, at the same time, individual steel mills in Hubei and Hunan provinces resumed rebar rolling lines as planned, driving up the capacity utilization rate. As a combined result, rebar production slightly increased. In terms of in-plant inventory, affected by heavy rainfall and steel mills' refusal to budge on prices, the inventory of steel mills in the region slightly accumulated.

It is expected that rebar production in Central China will significantly increase next week, mainly due to the resumption of one rebar rolling line each in Hubei, Hunan, and Henan provinces this week. The actual number of operating days next week will be more than this week, and the capacity utilization rate will increase.

Source: SMM

During the survey period (June 17-23), the weekly production of wire rod in Central China decreased MoM.

Specifically, during this period, individual steel mills in Henan province transferred surplus billets to wire rod production due to bar maintenance, leading to a slight increase in supply. However, in Hubei province, some electric furnace mills slightly reduced their operating hours due to difficulties in collecting steel scrap and poor profits. Meanwhile, the actual number of operating days for wire rod rolling lines at some blast furnace mills was less than the previous period. As a combined result, the capacity utilization rate in the region slightly decreased, and wire rod production also decreased. In terms of in-plant inventory, the demand for wire rod showed a pullback, and the direct supply to end-users from steel mills decreased, leading to a slight accumulation of in-plant inventory.

It is expected that the capacity utilization rate of wire rod in Central China will decrease next week, mainly due to the planned resumption of bar and wire rod production at individual steel mills in Henan province, with wire rod rolling lines returning to normal production and production slightly decreasing.

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