Chinese steelmakers’ rebar production will total an estimated 23.1 million tonnes in December, up 4% on month or 0.4% on year, as mills have been less affected by production restrictions this winter than last, according to Mysteel’s latest survey. The continued high production might add pressure to rebar stocks, however.
The production restrictions in areas where curbs are in place are not as strict as in previous years. “In areas such as Hubei (Central China), Zhejiang (East China) and Liaoning (Northeast China), the production cuts are smaller than previously, and in Sichuan (Southwest China) and Shaanxi (Northwest China) where mills scaled down production last December, (rebar) production this year remains largely normal,” the survey’s compilers indicated.
Since 2017, China’s central government has asked local governments in environmentally sensitive areas such as North China’s Beijing-Tianjin-Hebei region to implement curbing measures among polluting industries including steelmakers over the November-March winter months to reduce air pollution.
But each winter, the severity of the restrictions is adjusted according to industry conditions. This winter, with more Chinese steel producers meeting the country’s emission standards for the industry, the restrictive measures have been eased and have become more targeted, Mysteel Global understands.
For example, in Tangshan, the country’s top steel producing hub in North China’s Hebei province, the total capacity under restrictions is estimated at 12.2 million tonnes/year, less than the 15.8 million t/y in the winter of 2019-2020, as Mysteel Global reported.
November’s rebar production statistics already show the trend. Mysteel’s survey across 218 rebar producers in China showed that their total rebar output was 22.3 million tonnes in November, up 2.3% on month or 1.8% on year.
In terms of daily rebar production last month, the blast-furnace mills produced 631,800 tonnes/day of rebar, the electric-arc-furnace mills contributed 83,400 t/d, while independent rolling mills produced 27,900 t/d, according to Mysteel’s survey.
Output from all three types of producers rose notably due to healthy profits. In November, the profits of BF-based makers averaged Yuan 300/tonne ($45.9/t) while those of the EAF mills were around Yuan 200/t, Mysteel’s survey showed.
Yet, the sustained high production is expected to exert pressure on mill and retail stocks. Rebar stocks at the surveyed mills had already surged in the past two weeks and the keenness of traders for procuring had slowed significantly due to the weakening demand that usually accompanies winter in China, Mysteel Global noted.
By mid or late December, rebar stocks at the mills and at retail warehouses will reverse up, with the total seen increasing by 1.05 million tonnes or 11% from the 9.85 million tonnes at the end of November, Mysteel estimates.
Nevertheless, at present, rebar stocks are already at the same level as this time last year, while at the end of November, the volumes still stood higher by 23% on year, Mysteel Global noted.
Written by Olivia Zhang, zhangwd@mysteel.com and Chen Sulan, chensl@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Photo: World Steel Association
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