Since September, terminal demand has remained relatively weak. Although steel inventories were not high, steel prices underperformed. Driven by high pig iron production and pre-holiday stock replenishment, raw material prices rose sharply. Consequently, steel mills suffered losses, which triggered massive shutdown for maintenance in some areas. Entering October, demand for construction steel was relatively resilient, and China issued favourable macroeconomic policies, allowing steel prices to rebound. This encouraged some steel mills to resume production after blast furnace maintenance. According to SMM research, 10 blast furnaces were planned to resume production in October, but the number of blast furnaces that actually resumed production was 22. A total of 33 blast furnaces were put under maintenance across the country in October, mainly due to maintenance at some steel plants in Shanxi, Henan and Hebei. This caused a loss of 5.06 million mt of pig iron output, up 1.65 million mt MoM.
Entering November, steel demand, albeit being resilient, has not improved significantly. The steel industry chain has improved, driven by favorable macro policies, but still bears the possibility of worsening. According to SMM’s latest survey results, 15 blast furnaces are planned to be overhauled in November, while 13 are planned to resume production. Taken altogether, 6.0054 million mt of pig iron output is estimated to be lost, an increase of 937,500 mt from October. Terminal demand is gradually entering the off-season. The demand for building materials in north China may decline as cold winter weather undermines construction activity. The overall demand for steel will decline. The losses of steel plants may deteriorate, which could force them to close blast furnaces for maintenance. Most of the northern regions will enter the heating season in mid-November. It is expected that environmental protection-driven production restrictions in Hebei, Shandong, Shanxi and other regions will be stricter. Some steel mills will overhaul blast furnaces in advance due to factors such as losses and regulatory production restrictions.
