- Mills ordered to curb output to tackle air pollution
- Profit margins shrink amid higher iron ore costs
Mysteel Global: Production among Chinese blast furnace (BF) steel producers continued falling during the past week, as some BF mills in North China were subject to mandated production curbs, and mills also became more cautious about producing due to negative steel margins, Mysteel’s latest survey showed. This marks the fifth consecutive week of a drop in production.
During 24-30 October, the average capacity utilisation rate among the 247 BF steelmakers under Mysteel’s regular tracking decreased for the fifth straight week by another 1.3 percentage points to 88.6%, with their daily hot metal output falling by 1.5% w-o-w to 2.36 million tonnes (mnt)/day.
During the same period, the average operational rate among these 247 mills also dropped by 3 percentage points w-o-w to 81.8%, according to the survey.
Steel mills in Tangshan and some other cities in North China’s Hebei province have been required by local authorities to cut BF operations by 30% from 27 October to 31 October to tackle air pollution, impacting about 409,500 tonnes (t) of hot metal production.
Meanwhile, some domestic steel mills halted operations to conduct regular maintenance, and some reined in production as they started to lose money on operations, Mysteel’s survey showed.
As of 30 October, only around 45% of the 247 BF steelmakers under Mysteel’s tracking could make some profits on selling their steel products, lower by 3 percentage points from a week earlier. The reading was also lower by a significant 16 points compared with the same period last year.
The firm increases in prices of hot metal feed materials kept squeezing steel mills’ profit margins, Mysteel Global noted. For example, Mysteel’s SEADEX 62% Australian Fines gained $2.05/dmt w-o-w to reach $106.6/dmt CFR Qingdao by 30 October.
In parallel with the reduction in hot metal production, combined consumption of imported iron ore by the 247 steelmakers Mysteel tracks averaged 2.92 mnt/d during 24-30 October, down by 1.6% from the previous week.
As of 30 October, the total inventories of imported iron ore in all forms held by the same 247 mills dropped by 2.5% w-o-w to 88.5 mnt, the survey showed. The existing stocks would be sufficient to last these mills for 30.4 days at their current usage rate, shorter by 0.3 day from the previous period, according to Mysteel’s assessment.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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