Last week coincided with the extended National Day and Mid-Autumn Festival holidays in China. During the holidays, work stoppages at construction sites in some cities, coupled with traffic controls, led to a continuous accumulation of construction steel inventory. In the first week after the holidays, post-holiday restocking demand from end-users fell short of expectations, market trading activity was sluggish, and inventory destocking pressure remained high. Additionally, recent announcements by Trump that the US will impose 100% tariffs and export controls on China from November 1 have intensified bearish market sentiment. Construction steel prices fluctuated downward; as of October 11, rebar prices in east China stood at 3,160 yuan/mt, with a profit of 22 yuan/mt, down 9 yuan/mt from pre-holiday levels. According to the survey, some mills reported that real-time profits are near the break-even point, reducing production enthusiasm. Recently, some mills have switched to producing other steel varieties or scheduled annual maintenance, leading to an increase in the maintenance impact on construction steel.
According to the SMM survey, maintenance impacts on construction steel increased in both east and north China. In east China, some mills brought forward annual maintenance plans for blast furnaces and converters, while individual mills conducted overhauls on coiled rebar rolling lines. In north China, certain mills prioritized hot metal supply to lines producing other steel varieties due to their stronger profitability compared to construction steel, resulting in temporary shutdowns of construction steel rolling lines. In contrast, individual mills in central China regularly produce a fixed quantity of wire rod each month, and planned to resume production on wire rod rolling lines during this period. Mills in other regions maintained the same maintenance status as the previous week, with no significant change in the maintenance impact.
Looking ahead, post-holiday construction activity is expected to benefit from more suitable weather, potentially accelerating work progress. Additionally, in north China, end-users may rush to meet deadlines before the winter break, boosting construction steel demand during the October peak season. However, given the still high inventory pressure, spot prices may remain under upward pressure. Cost side, steel mills still have raw material restocking needs after the holiday, and expectations for a second round of coke price increases persist, keeping production costs relatively firm. Mill profits are unlikely to improve significantly, raising the possibility that more mills may advance annual maintenance plans or switch production to other steel varieties. The impact from maintenance on construction steel is expected to continue increasing slightly in the next period.
Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market exchanges, and relying on SMM’s internal database model, for reference only and do not constitute decision-making recommendations.
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