Hot-rolled steel production across 25 major Chinese steel mills in June is expected to shrink 4.6% from the realised output in May due to maintenance work and the Shanghai Cooperation Organisation (SCO) summit.
Volumes for exports would drop 31.2% from May’s level, while output for the domestic market is estimated to be 1.8% lower month on month.
Some of the maintenance works are aimed at cold rolling lines given the narrow price spreads between hot-rolled and cold-rolled steel. The spread stood at 350 yuan/mt as of Monday June 11, compared with the 2017 average of 636 yuan/mt.
Steel mills remained keen to produce hot-rolled coil to chase wider margins, and the supply of such materials is therefore likely to remain high this month.
In North China, the surveyed mills planned to produce 4.55 million mt of hot-rolled coil in June, down 3% from a month ago. Planned volumes for exports stood at 277,000 mt, down 114,700 mt. Given the high profits, mills with maintenance work limited their cuts. In fact, Benxi Steel and Shougang plan to raise their production.
Mills in east China planned to produce 2.72 million mt of hot-rolled coil this month, down 8% from May. Planned volumes for exports are expected at 316,000 mt, down 163,000 mt. Some of these mills went through production cut or maintenance on the SCO Summit.
Mills in south and central China planned to produce 1.23 million mt of hot-rolled coil in June, down 7% from a month ago, with exports at 20,000 mt, unchanged from a month ago. Steel mills in west China plan to produce 383,000 mt of hot-rolled coil, up 8% from May.