Steel Mills Using Purchased Billets to Resume Production After Lantern Festival Operating Rate to Rise Sharply in March

Published: Feb 28, 2026 14:28

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[SMM Survey on Operating Rate of Steel Mills Using Externally Purchased Billets] According to an SMM survey, as of February 28, the operating rate of steel mills using externally purchased billets that mainly produce construction materials was 0%, down 24.49 percentage points MoM from the January operating rate and down 16.21 percentage points YoY.

In February, national construction steel prices fluctuated downward. On February 2, the rebar price was 3,148 yuan/mt, the highest price for the month. Later, as the Chinese New Year holiday approached, market participants gradually left the market, construction material demand continued to weaken, and rebar prices continued to decline.

Cost side, after the holiday, coking coal supply from production areas rebounded. Downstream coking enterprises, considering future market risks, primarily purchased raw materials based on rigid demand. The overall supply-demand pattern for coking coal tended towards looser. After the holiday, some mines had already lowered their offers due to poor shipments, showing downward pressure on coal prices. For coke, influenced by good arrivals at steel mills and continuously weakening coking coal prices, the market also holds expectations for price reductions. Currently, the raw material side overall lacks strong price support.

Supply side, approaching the Two Sessions, some blast furnace steel mills in the Hebei region underwent maintenance, but the actual impact on construction material production was relatively limited. Production at blast furnace steel mills in other regions basically continued at pre-holiday levels, with the overall supply pace remaining stable. For EAF steel mills, affected by the Chinese New Year holiday and the pace of workers returning to work, most enterprises planned to concentrate production resumptions after the Lantern Festival. Current production at electric furnace mills remains at a seasonally low level. Steel mills using externally purchased billets have also not yet entered a full production resumption phase, with most concentrating their restart times after the Lantern Festival.

Demand side, rebar demand in February overall showed a seasonal weakening trend. Affected by multiple factors including concentrated work stoppages during the Chinese New Year holiday, lagging pace of workers returning to work, and low temperatures in the north restricting outdoor construction, end-user procurement activities slowed down comprehensively, and market transactions remained at a low level for the year. Specifically, in the first ten-day period, construction material demand had already entered a contraction channel in advance, with daily average transactions of construction steel by mainstream traders continuously declining; during the Spring Festival period, terminal procurement was nearly stagnant, and apparent consumption plummeted; although the Lantern Festival was approaching in the last ten-day period, the work resumption process remained relatively slow. Overall, affected by multiple factors, apparent consumption remains at a relatively low level, downstream transactions are sluggish, both steel mill inventory and social inventory are accumulating, and total inventory continues to rise. The market is generally in a post-holiday off-season pattern characterized by shrinking supply, weak demand, and accelerating inventory buildup. Looking ahead, after the Lantern Festival, both supply and demand sides are expected to enter a recovery phase. Coupled with the approaching Two Sessions, market expectations for related policies remain. Subsequent attention should be paid to the recovery of steel demand and the policy developments during the Two Sessions. Additionally, considering that most billet preparation plants plan to resume production intensively in March, the operating rate of billet preparation plants is expected to increase significantly in March.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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