China’s rebar output in August rose by a tiny 0.7% on year to 18.07 million tonnes, according to the latest National Bureau of Statistics data released on September 18. The August result took total rebar output during January-August to 134 million tonnes, higher by 4.4% on year.
August output was also 3.7% higher than production in July, the NBS statistics showed. Market watchers attributed this to steelmakers preferring to produce more rebars than other products during the month to cash in on the better market prices that rebars are currently commanding – and thus, enjoy higher margins.
Rebar output last month accounted for a dominating 51.2% of the total output of major long steel products, up by 0.7 percentage point from July, according to Mysteel’s calculation based on NBS data. Longs include rebar, wire rod and welded pipe.
During August, Mysteel’s national average benchmark price for HRB 400 20mm dia rebar refreshed the year’s peak several times to reach a new high for the year on August 21 of Yuan 4,636/tonne ($682/t) including 16% VAT.
“Those producers (not under capacity curtailments) chose to direct more molten steel into rolling rebars last month to generate more profits,” a Shanghai-based industry source said. The results of Mysteel’s latest monthly production survey of 91 major blast furnace mills showed that their profit margin on rebar surged to an average of Yuan 1,000/t in August, up by 18% or Yuan 153/t compared with the average in July.
Indeed, the utilization rate of rebar rolling mills operated by the 137 major producers Mysteel regularly tracks jumped by 2.8 percentage points over the month to 72.35% as of August 31, according to Mysteel’s database.
Contributing to the higher output last month was the gradual restart of business of some steelmakers whose mills were previously stopped for maintenance or under suspension for pollution control inspections, market respondents said. The operational rate for making rebar among those 137 mills improved by 0.33 percentage points over the month as of August 31, Mysteel notes.
Written by Venus Wang, wangyi@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com