Some Chinese mills continue to raise rebar output despite negative margin: sources

30 May 2022
Some Chinese mills continue to raise rebar output despite negative margin: sources

          Some Chinese mills continue to increase their rebar production volume even though most of China's rebar mill margin for blast furnaces dropped below breakeven point, major rebar mill sources in China told S&P Global Commodity Insights.

          The domestic rebar margin fell below the breakeven point and has been in negative territory since early May, according to S&P Global's mill margin analysis.

          A northern China mill source in Tangshan said that despite the negative rebar mill margin, the mill continued running most production lines as there was no restriction on the policy.

          The source added that the mill no longer faced lack of raw material supply or logistic issues. Therefore, the mill would keep a high operation rate, as these issues were the main factors that caused a low rate during the pandemic lockdown in Tangshan in late March.

          A mill source in Shandong said: “Our mill started to increase the rebar production and is currently running three rebar production lines.” The source added that the mill chose to lift production volume as the margin was healthy.

          The source added that their rebar margin was at Yuan 100-200/mt ($15-$30/mt), higher than most China mills that S&P Global surveyed.

          Among the total of seven in the survey across different regions in China, only one mill in Eastern China of Jiangsu cut production due to fall in profits.

          The mill is currently undergoing maintenance for several bar production lines and taking the initiative to cut production due to the negative margin, the company source said.


Source : Steel Business Briefing

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