Ten additional blast furnaces were put into operation this year, that led to a net increase of 11.02 million tonnes (mn t) of crude steel production. Five were put into production in the first quarter, four, in the second quarter, and one, more recently in the fourth quarter.
The one in Q4 was put into operation in mid-December, with a pig iron production capacity of 3 million tonnes (mn t). The late start date will have an impact on the output figures in CY’22. The blast furnace capacity would increase by 9 mn t in CY’22.
At present, two blast furnaces are still under construction. One is Baosteel Zhanjiang’s 5050 cubic blast furnace, which was originally planned to be put into operation on 1 Jul’21, with an annual output of 4 mn t of molten iron. The other is a 2,300 cubic blast furnace in Nantong, Zhongtian, with an annual output of 2 mn t of molten iron.
Steel mill profits
If there is no policy-driven reduction in production, the profits of steel mills will take a big step up in CY’22, but long-term losses cannot be ruled out.
If there are government-dictated production curbs, the profits of the steel mills will not exceed the 1,100 yuan/t ($173/t) seen in May 2021, because the first half of CY’21 saw the impact of simultaneous effects of limited production plus high demand.
But, after the high turnover levels dropped, the demand for crude steel has gradually declined.
Rebar
The price fluctuation range is RMB 3,100-5,200/t ($488-819/t). If the steel mills face losses or exports margins look good then rebar prices may stay subdued. If there is a relatively good export margins, then prices may uptrend.
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