WEEKLY: Regular overhaul stoppages clip rebar output
The early summer months of July-August when steel demand is undermined by scorching temperatures and rainy weather are used by the Chinese mills to conduct regular maintenance, Mysteel notes. The stoppages observed by more mills during the survey week caused the national operational rate of producing rebar to slide 1.6 percentage points on week to 77.4%, the study shows.
Significantly, the decline in the operational rate in North China was the steepest across the country, falling by 3.2 percentage points over the week. This was despite a batch of steel firms in Tangshan, the powerhouse of China’s steel production in North China’s Hebei province, being allowed by the local government to recover production for the first half of July, according to the study.
“Though all re-rollers in Tangshan recovered their operations, only one integrated maker was allowed to produce normally in the first half month. Also, the tiny output boost from Tangshan’s re-rollers was unable to offset the drop in output nationwide as the maintenance stoppages became more numerous,” a Tangshan-based analyst said.
In previous years, most mills didn’t follow the ‘tradition’ of the summer overhaul as their profits remained generally decent, a Shanghai-based insider remarked. “But the current situation is not what it was,” she observed. This year, seasonal weather factors, especially the heavy rains and flooding across much of the country, seemed much stronger than previously and thus, the quick contraction of demand squeezed mills’ profits significantly as well, compelling them to slow production and conduct maintenance, she added.
The average margin for making rebar among the 91 integrated mills Mysteel monitors was slashed by Yuan 119/tonne ($17/t) to a minuscule Yuan 166/t last month, an extremely poor return compared to the average profit of Yuan 708/t a year ago, according to Mysteel’s database.
Written by Venus
Wang, wangyi@mysteel.com
Edited by Russ
McCulloch, russ.mcculloch@mysteel.com
Table 1: Mysteel Rebar Production Survey by Region on July 10 (Unit: ’000 tonnes)
Table 2: Mysteel Wire Rod Production Survey by Region on July 10 (Unit: ‘000 tonnes)
Table 3: Mysteel Rebar Production Survey by Process on July 10 (Unit: ‘000 tonnes)
Table 4: Mysteel Wire Rod Production Survey by Process on July 10 (Unit: ‘000 tonnes)
Table 5: Mysteel Rebar and Wire Rod Stocks Survey by Region on July 10 (Unit: ‘000 tonnes)
Table 6: Mysteel Rebar and Wire Rod Stocks Survey by Process on July 10 (Unit: ‘000 tonnes)
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