[SMM Rebar Production Schedule] Steel mills' planned production: rebar output to increase, wire rod output to decrease; driven by profits in North China's plate and strip sector, hot metal allocation adjusted

Since April 2022, the SMM survey sample for rebar production scheduling has been expanded to include 56 enterprises.
According to the SMM survey data from 56 key steel-producing enterprises:

• The planned rebar production for August was 8.776 million mt, an increase of 114,700 mt compared to the actual production in July, representing a growth rate of 1.32%;
• The planned wire rod production for August was 3.4541 million mt, a decrease of 65,700 mt compared to the actual production in July, representing a decline rate of 1.87%.

Chart1-2: Production Schedule for Rebar and Wire Rod at Steel Mill (56 Steel Mills)

Data source: SMM

Table-1: Actual Production Schedule of Rebar and Coiled Rebar in May and Planned Production Volume in June (10,000 mt)

Overall:
In July, the price of construction steel nationwide fluctuated upward. The market had high expectations for the meeting of the Political Bureau of the Central Committee, and there were positive news on the raw material side. Additionally, the investment in the Yarlung Zangbo River hydropower station project in the industry drove up enthusiasm for finished steel, stimulating the continuous strengthening of spot prices. On the cost side, the price of finished steel rose in tandem with the price of raw materials, and the profits of many steel mills improved, with overall benefits ranging from (-100 to 300) yuan/mt. In August, steel mills planned to increase rebar production and decrease wire rod production, with a slight increase in total production. Steel mills in the northern region had a gross profit of over 300 yuan/mt for plate and strip production, and in August, hot metal would be prioritized to ensure full production of plate and strip rolling lines, so there were plans to halt wire rod rolling lines. In contrast, steel mills in east China planned to resume blast furnace production by month-end, with an increase in rebar production. Steel mills in other regions mostly maintained normal production.

In summary, steel mills are profit-oriented and choose high-margin varieties. However, considering the "stronger-than-usual off-season" this year, steel mills currently have no clear production cut plans, and there are still expectations for an increase in building materials production in the later period.