China: BF mills’ output retreats, profits shrink further

• Some mills start maintenance works amid squeezed margins
• Only 38% of tracked BF mills making profits on steel sales

Mysteel Global: After a brief rebound from a six-week drop in the previous week, production among Chinese blast furnace (BF) steel producers pulled back again during 14-20 November, with some mills starting maintenance works amid squeezed steel margins, Mysteel’s survey showed.

During the latest survey period, the average capacity utilisation rate among the 247 BF steelmakers nationwide under Mysteel’s regular tracking retreated by 0.2 percentage points w-o-w to 88.6%, with their combined output of hot metal falling 0.3% from the prior week to 2.36 million tonnes (mnt)/day.

During the same period, the operational rate among these sampled mills also slipped 0.6 percentage points w-o-w to 82.2%, the survey showed.

The rising prices for steelmaking raw materials such as iron ore and coke lifted the input costs incurred by BF steelmakers, pushing more mills to the brink of losing money and therefore causing them to rein in production, Mysteel Global noted.

By 20 November, for example, China’s national composite coke price was assessed by Mysteel at RMB 1,567/tonne (t) ($220.5/t), including 13% VAT, higher by 3% w-o-w.

As of the same day, only around 38% of the 247 BF mills under Mysteel’s monitoring could make some profits on steel sales, lower by 1 percentage point from a week earlier.

In parallel with the reduction in hot metal output, the total consumption of imported iron ore by the 247 steelmakers Mysteel tracks averaged 2.92 mnt/d during 14-20 November, lower by 0.3% from the previous period.

By 20 November, the total inventories of imported iron ore in all forms held by these mills slid 0.8% w-o-w to 9 mnt, the survey showed. The existing stocks would be sufficient to last these mills for 30.9 days at their current usage rate, shorter by 0.2 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.