Blast furnace capacity utilization among the 247 Chinese steel mills Mysteel canvasses weekly dipped to an average of 93.69% over September 18-24, lower for the sixth week and down by 0.56 percentage point from the prior period, according to Mysteel’s latest weekly survey. Observers examining the survey findings suggest the decline was mainly equipment-related – rather than market driven – and that many Chinese steel mills still intend to maintain current output levels.
The surveyed mills’ combined molten iron output during the latest period averaged 2.49 million tonnes/day, the survey shows, down by a mere 14,900 t/d on week, though the operating rate of these steel mills declined by the slightly larger margin of 1.57 percentage points on week to 89.06%.
Nevertheless, the capacity utilization rate was still 9.06 percentage points higher on year, according to Mysteel’s database.
“The usage rate declined largely because several blast furnaces in North China that were part of ‘capacity swap’ arrangements were officially shut down and are now waiting to be dismantled. For the time being, the new blast furnaces replacing them have not been put into operation,” a Shanghai-based market watcher told Mysteel Global.
Over the survey week, output at most of the other steel mills monitored seemed little affected by the softening domestic market sentiment and declining steel prices. “For now, they are still enjoying some steel margins,” the Shanghai source added.
However, prices of the BF mills’ crucial input, iron ore, retreated further over the past week, amid the gradual shift in the supply-demand balance and under the pressure of an underperforming steel market, Mysteel Global observed. Steel demand during China’s so-called ‘Golden September’ for steel consumption has so far fallen short of expectations, as reported.
As of September 24, Mysteel’s PORTDEX 62% Fe Australian Fines index had dropped to Yuan 896/wmt ($131.6/wmt) FOT Qingdao and including the 13% VAT, down by another Yuan 31/wmt on week, according to Mysteel’s database.
Over the same September 18-24 period, Mysteel’s survey of a smaller sample of 163 blast-furnace steel plants across China showed the same trend, with their furnace capacity utilization rate reversing down by 0.68 percentage point on week to 77.37% after previous week’s small incline.
By September 24, inventories of imported iron ore at the 247 mills – including the tonnage at their plants, the ports, and on the water – had increased for the fifth week, swelling by another 3.67 million tonnes on week to around 117 million tonnes. At the same time, the mills’ daily fines consumption reversed down by 20,100 t/d over September 17-24 to 3.1 million t/d in total, after rising in the prior week. The existing stocks will support these mills for an average of 37.77 days of consumption at the present rate, or 1.42 day longer on week.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Photo: World Steel
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