Will the Rising Inventory of Steel Mills in Shanxi Lead to Output Cut?

SHANGHAI, Apr 11 (SMM) -

SMM has conducted intensive research to verify the rumours about the output and inventory of steel mills in Shanxi.

Rumour 1: The outbound sales of goods produced in Shanxi in 2023 may weaken. SMM survey confirms that steel outflows from Shanxi to Henan, Shaanxi, Sichuan, Chongqing, Beijing and Tianjin will be hindered as demand in these areas has recovered slowly.

Rumour 2: Steel mills in Shanxi plan to cut production intensively. SMM survey shows that only one steel mill received a notice of production restrictions for environmental protection and stopped production on April 6. The remaining 6 steel mills have not yet taken any action.

Rumour 3: Inventory of steel mills in Shanxi may rise sharply. According to SMM survey, since mid-March, the resumption of work has completed but the sales were scarce. On the supply side, four blast furnaces in Shanxi resumed production in March and the average pig iron output increased 16,500 mt. As such, almost all steel mills have indicated that the current inventory was relatively high.

Rumour 4: The fund chains of steel mills in Shanxi are broken. Most of steel mills in Shanxi carried out winter storage independently this year, and the falling steel prices after the Chinese New Year holiday weighed on their profits. Although the risks of fund shortage is low, if the steel prices decline further, sellers may stop the transactions.