Mumbai, 03 Dec (Commoditiescontrol): The operating rate of Chinese steel mills using externally purchased billets, primarily producing construction steel, fell to 26.21% as of November 29, down 4.79 percentage points month-on-month (MoM) and 4.58 percentage points year-on-year (YoY), according to an SMM survey. This reflects growing challenges in China’s construction steel market as demand weakens and prices decline.
Rebar prices in November dropped from 3,541.5 yuan/mt on November 1 to 3,404.3 yuan/mt by November 28, a decline of 137.2 yuan/mt. Despite ample coking coal supply and easing prices, steel mills’ coke inventories remain high, and falling steel prices are increasing the risk of further declines in raw material costs.
Seasonal factors, including severe cold weather and declining profitability, have led to production cuts across the sector. Mills are scaling back operations, with some in northwest China halting production for winter, further reducing construction steel supply. Profit compression has particularly impacted mills reliant on purchased billets, driving a notable decline in operating rates.
Demand has weakened due to harsh winter conditions in northern China, which have slowed outdoor construction and caused inventory accumulation. While macroeconomic drivers such as year-end property completions and December economic meetings offer potential support, market fundamentals remain under pressure.
Global stakeholders should note that China’s construction steel market, a critical indicator of the country’s broader economic activity, is expected to face continued challenges in December, with further declines in production likely. The global market will closely monitor China’s macroeconomic policies and winter stockpiling trends for signs of stabilization or further contraction.
(By Commoditiescontrol Bureau: 09820130172)
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