SHANGHAI, Oct 24 (SMM) – New standards on rebar specifications are likely to have a minimal impact on output at Chinese steelmakers as profit margins will remain healthy after standards push up costs, SMM expects.
The new standards, effective from November 1, is estimated to raise costs for rebar by 150-300 yuan/mt across mills whose steelmaking process includes or excludes blast furnaces, and mills that purchase billet to produce rebar.
Mills with raw materials of iron ore or scrap are unlikely to cut output as the higher costs would not lower profit margins drastically.
Costs for mills that produce steel with iron ore are expected to grow by 0-300 yuan/mt. Current margins stand above 1,000 yuan/mt.
Across mills that produce steel with scrap, current margin stand at about 500 yuan/mt, and the new standards are expected to drive up costs by 200 yuan/mt.
Some rolling mills that purchase billet to produce rebar, however, fretted over an undersupplied market with alloy billet. Current adequate supplies of billet are likely to keep rolling mills operating in the black.
