WEEKLY: Buckle up – rebar output sets to soar!
Mysteel’s survey among 137 major long steelmakers nationwide showed they produced a total of 3.25 million tonnes of rebar over the week to last Wednesday, higher by just 20,700 tonnes or 0.6% on week. Moreover, the two major production indicators – operational rate and capacity utilization – posted only slight gains, with the former rising by 1 percentage point and the latter by just 0.5 percentage point on week to 68.5% and 71.3% respectively.
The rise in output, slight though it was, was mainly thanks to mini mills picking up production, Mysteel understands. As of March 13, the operational rate of the monitored mini mills climbed by a fairly large 3.4 percentage points week on week to 55.2%. Their capacity utilization increased 4.3 percentage points on week to (a still low) 47.6%.
“Most domestic electric-arc furnace mills are not running at full capacity, which raises the possibility of rebar output picking up when the mini mills open the throttle,” a Shanghai-based long steel analyst explained.
The mini mills now reluctant to beef up rebar production as their margins on these construction longs have yet to reach the levels the steelmakers want, chiefly because the climb in scrap prices has levered up the mills’ production costs.
For much of this year to date, Mysteel’s steel scrap price index has been generally firm, reaching Yuan 2,533.5/t ($378/t) as of March 15, up by Yuan 46/t from the last week of 2018, according to Mysteel’s database.
But it’s not just the mini mills with the capacity to pick up the pace of production. “There’s also lots of room for the blast-furnace mills to boost rebar output but for now, many of them are still under temporary production restrictions or are stopped for maintenance due to anti-pollution measures,” the analyst pointed out, adding that last week, the integrated long steelmakers didn’t contribute much to the increase in rebar output. The integrated mills account for nearly 80% of the total capacity of the 137 long-steel producers Mysteel regularly monitors.
Another factor pointing to a pending jolt in rebar output was the conclusion last week in Beijing of the two top-level political sessions and the departure from the city of the some 5,000 government and people’s representatives. As reported, during the two weeks the meetings were in progress, work on construction sites and other activities likely to cause dust and pollution was halted, especially in Hebei province which borders Beijing on three sides.
Now that the sessions are over, building contractors are gradually resuming normal operations, which will bring a burst in demand for construction steel in the late March or the early April, Mysteel is told.
Sales of long steel items nationwide – chiefly of rebar, wire rod and bar-in-coil – among the 237 steel traders Mysteel monitors, averaged 203,151 tonnes/day during the week to March 13, representing a near 16% on-week jump and touching the level recorded last October when the domestic steel market was enjoying a boom.
Meanwhile, rebar stocks in these steelmakers’ warehouses contracted for a third straight week last week, plunging by 400,300 tonnes or 12.7% week on week to 2.75 million tonnes as of March 13.
Written by Venus Wang, wangyi@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Table 1: Mysteel Rebar Production Survey by Region on March 13 (Unit: ’000 tonnes)
Table 2: Mysteel Wire Rod Production Survey by Region on March 13 (Unit: ‘000 tonnes)
Table 3: Mysteel Rebar Production Survey by Process on March 13 (Unit: ‘000 tonnes)
Table 4: Mysteel Wire Rod Production Survey by Process on March 13 (Unit: ‘000 tonnes)
Table 5: Mysteel Rebar and Wire Rod Stocks Survey by Region on March 13 (Unit: ‘000 tonnes)
Table 6: Mysteel Rebar and Wire Rod Stocks Survey by Process on March 13 (Unit: ‘000 tonnes)
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