Post-Holiday Futures Rise Drives Up Production of Both Rebar and Wire Rod

During the survey period (May 5-11), the operating rate and capacity utilization rate of rebar and wire rod in the Central China region both increased.

During the survey period (May 5–May 11), both the operating rate and capacity utilization rate of rebar rolling lines in the Central China region increased.

Specifically, steel mills showed notable divergence this period. In Hubei, some blast furnace steel mills, benefiting from better profitability of specialty products, chose to reduce rebar output and increase specialty product output. Meanwhile, as futures rose significantly recently, some EAF steel mills saw improved profitability and chose to resume operations, simultaneously resuming production on one rebar rolling line. Additionally, individual steel mills in Henan restored normal production on rebar rolling lines after the holiday, with more operating days this period than last period. Under these combined effects, rebar supply increased this period. On the mill inventory side, futures rose after the holiday, boosting market trading activity and driving mill inventory drawdown.

The operating rate of rebar in Central China is expected to decline next period while the capacity utilization rate is expected to rise. This is mainly because some steel mills in Hunan plan to switch to industrial wire rod production and will shut down one rebar rolling line. At the same time, since individual steel mills in Hubei resumed production on one rebar rolling line this period, next period will have more operating days than this period. Under these combined effects, the capacity utilization rate will still increase.

During the survey period (May 5–May 11), both the operating rate and capacity utilization rate of wire rod rolling lines in the Central China region increased.

Specifically, during the survey period, an individual EAF steel mill in Hubei resumed production as planned, simultaneously resuming production on one wire rod rolling line, driving supply increments in the current period. Regarding mill inventories, during the survey period, futures rose, and agents locked in resources in advance. As resources had not yet been transferred to the market, mill inventories of wire rod accumulated slightly in the current period.

For the next period, wire rod rolling line supply in the Central China region is still expected to increase. This is mainly because some blast furnace mills in Hubei plan to resume production on one wire rod rolling line at an unspecified time, driving the operating rate and capacity utilization rate to rise simultaneously.