Profitability improved slightly, with the operating rate of steel mills using externally purchased billets rising 3.36% MoM.

Published: Oct 31, 2025 16:26

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Mill Operating Rate] According to an SMM survey, as of October 31, the operating rate of steel mills using externally purchased billets that mainly produce construction steel stood at 16.93%, up 3.36 percentage points from the month-end September level but down 14.07 percentage points YoY.

In October, national construction steel prices showed mixed performance, with the average rebar price rising 11 yuan/mt MoM. Improved weather conditions slightly accelerated construction progress, and direct deliveries to construction sites were moderate. However, traders remained cautious with low enthusiasm for cargo pick-up, leading to generally moderate overall transactions.
Cost side, environmental protection-related controls and safety inspections, among other factors, led to production suspensions or restrictions at some coking coal mines in major producing areas, significantly constraining coking coal supply release. The coking coal market continued to hold up well, directly pushing up raw coal costs for coking enterprises. Some coking companies have already fallen into losses, further limiting coke production expansion. Considering supply-demand and other factors, coke prices are expected to see further increases, maintaining cost support for steel.
Supply side, EAF steel mills are currently constrained by both weak market conditions and high cost pressures, with some electric furnace plants reducing operating hours. Blast furnace steel mills are seeing poor rebar production margins, and some are expected to optimize production strategies by shifting hot metal supply to specialty steel products, which may ease construction steel supply pressure. The operating rate of steel mills using externally purchased billets showed mixed performance in October. Driven by a slight rise in construction steel prices, overall industry profitability improved slightly compared with the previous period. Against this backdrop, three such mills extended operating hours to expand production, while two others, still facing losses, slightly reduced operating hours to control costs.
Demand side, the traditional September-October peak season for construction is nearing its end. Construction pace remained stable in south China, while demand in north China seasonally pulled back as outdoor work decreased with falling temperatures. Meanwhile, some construction projects still face issues such as slow fund disbursement and delays in construction plans. End-users mainly restocked based on immediate needs, with limited willingness for large-scale concentrated procurement, constraining demand release. Overall, recent macro tailwinds have boosted market sentiment, driving up spot market prices for steel in recent days. However, as the positive news is digested, downstream end-users have become more cautious about purchasing high-priced resources, and the pace of market trading has slowed down, with overall transaction activity remaining moderate. Although the profitability of billet adjustment mills has improved, overall operating rates at these mills remain relatively low. As the northern market enters the full heating season in November, outdoor construction is expected to further decrease, making it unlikely for building materials prices to sustain an upward trend. If the production profitability of billet adjustment mills declines in November, their operating rates may see a slight reduction.

Steel

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