China's July Rebar Production to Decline Amidst Losses and Seasonal Slowdown
Key Chinese steel producers surveyed by SMM plan to reduce rebar production in July. The planned output for rebar is set at 7.428 million tons, a decrease of 389,700 tons or 4.98% compared to actual production in June. Daily rebar output is projected to fall by 8.05% in July. For wire rod, planned production in July is 3.197 million tons, a slight increase of 18,700 tons or 0.59% from June. However, daily wire rod output is expected to decrease by 2.66% in July. The steel industry is facing significant pressure as coke prices have seen multiple increases, with the tenth round of price hikes initiated. Steel mills have already experienced 3-4 rounds of price increases in June, severely compressing profit margins on finished products. Consequently, some companies are now operating at a loss. The current steel mill profitability rate stands at 33.33%, a notable decline from June, with most mills reporting profitability between -200 and 100 yuan per ton.
The data indicates a cyclical downturn in China's construction materials sector, driven by a confluence of rising input costs (coke) and weakening seasonal demand. Steel mills are responding to reduced profitability, with many now facing losses, by curtailing production of key rebar products. This strategic adjustment aims to balance supply with anticipated demand, potentially stabilizing prices in the short term. However, the persistent pressure from raw material costs and the broader economic environment will shape the sector's trajectory over the next decade. Future strategies may involve greater investment in efficiency, diversification, or exploring markets less susceptible to seasonal fluctuations to mitigate such cyclical pressures.
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