SHANGHAI, Sep 6 (SMM) – Planned production of construction material rebar shrank from a month ago in September as falling prices eroded rebar profits and environmental cutbacks tightened in north China ahead of the National Day parade in October.
Rebar scheduled output in September across 31 major producers of long steel in China is expected to fall 2.53% from the actual output in August and stand at 8.36 million mt, an SMM survey showed on Thursday September 5.
Output for domestic sales is planned at 8.16 million mt this month, down 2.59% from August, while scheduled exports are mostly flat on the month at 200,000 mt.
Major steelmaking city of Wu'an in Hebei province deepened its steel production control for September, which will counter the easing cuts in Tangshan for the month.
An SMM survey indicated that stricter curbs in Wu’an will affect pig iron production by 1.34 million mt and demand for iron ore by 1.65 million mt, up 378,200 mt and 650,500 mt, respectively, from the impacted volume in August.
Falling steel prices during July-August dragged rebar profits from highs and pushed producers to the verge of losses as of early September. This drove some rebar mills to conduct maintenance, which also accounted for the lower output schedule for September.
This month, southern spot market is expected to face greater supply pressure than the north, as a slew of new capacity will come online in south-west China.
Expected suspension of construction work in the north during the upcoming National Day will deter the release of local consumption and prompt steelmakers in the north to move cargoes down to the south in advance.
Separately, SMM survey also showed that the scheduled output of wire rods across surveyed mills rose 5% from the realised output in August, to 2.98 million mt in September.
