Macro Tailwinds and Pre-Holiday Restocking, Impact from Maintenance on Building Materials Expected to Continue Declining

Published: Sep 23, 2025 17:31

Source: SMM

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According to the SMM survey, the impact from maintenance on construction materials decreased in this period (9.2-9.26), with multiple steel mills resuming production of construction material rolling lines either in the previous or current period. The impact from maintenance on construction materials was 1.2506 million mt, down 84,100 mt MoM.

Last week, the US Fed's interest rate cut became the main topic of focus. In the first half of the week, macro expectations persisted, coupled with the planned shutdown of Xinjiang's thermal coal, leading to a generally positive trading atmosphere. Accumulated demand was somewhat released, and construction material prices rose slightly. Steel mill profits per ton of steel improved. It is reported that most blast furnace steel mills in east China saw rebar production benefits ranging from 50-100 yuan/mt. After the US Fed cut interest rates by 25 basis points, which did not exceed market expectations, some speculative funds withdrew, causing construction material prices to pull back and steel mill profit margins to contract slightly. Overall, steel mill production confidence was slightly boosted, with most steel mills resuming production of construction material rolling lines as planned, and the impact from maintenance on construction materials shifted from an increase to a decrease.

According to the SMM survey, the impact from maintenance on construction materials decreased in central, east, north, and north-west China. In central and north-west China, some steel mills resumed production of construction material rolling lines after maintenance in the previous period. In east China, one steel mill completed a major overhaul of its rebar rolling line in this period, while individual steel mills also ended converter maintenance, allowing the accompanying construction material rolling lines to resume production. Within Shanxi Province, a 1,300 cubic meter blast furnace and its associated AB rolling lines at one steel mill resumed production. In contrast, in south-west China, an individual steel mill's bar rolling line was shut down for maintenance in the previous period, with the impact concentrated in this period. Rolling lines in other regions maintained their maintenance status from last week, with no significant changes in the impact from maintenance.

Looking ahead, frequent macro tailwinds have stimulated futures to fluctuate upward. However, considering the increasing number of suitable weather days for downstream construction sites, overall demand remains moderate, and social inventory levels are high, leading to a cautious trading atmosphere. Spot prices struggle to follow the uptrend, and steel mill profits are unlikely to improve significantly. As the National Day holiday approaches, there is a rigid restocking demand from downstream construction sites, and it is not ruled out that there may be a concentrated release of demand in the near term. Given this, steel mills' willingness to cut production proactively is low, and it is expected that the impact from production cuts and maintenance will continue to decline in the next period.

Steel

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