China: BF-based steel mills’ output continues to fall but margins improve

• Maintenance stoppages trigger supply drop
• Profit margins increase on price rebound

MySteel Global: Production among Chinese blast furnace (BF) steel producers declined for the third straight week during November 28-December 4 amid increasing maintenance stoppages across the steelmakers, Mysteel’s survey showed.

During the latest survey period, the average capacity utilization rate among the 247 BF steelmakers nationwide under Mysteel’s tracking dropped further by 0.9 percentage point on week to sit at 87.1%, with their combined output of hot metal decreasing 1% on week to average 2.32 million tonnes/day.

During the same period, the average operational rate among these sampled mills also fell by 0.9 percentage point on week to 80.2%, the survey showed.

Some steelmakers in North, Central, and Southwest China blew off their blast furnaces to start regular maintenance works in the past week, leading to the decline in the overall hot metal production nationwide, Mysteel Global learned.

With the continuous retreat in hot metal output, the total consumption of imported iron ore by these 247 BF mills Mysteel tracks went lower by a larger 1.5% from the previous week, averaging 2.85 million t/d during November 28-December 4.

The reduction in the ore consumption led to the accumulation of iron ore stocks at mills, Mysteel Global noted. By December 4, the total inventories of imported iron ore in all forms held by the same 247 sampled mills rose by 0.5% from a week earlier to reach 89.8 million tonnes, the survey showed.

The existing stocks would be sufficient to last these mills for 31.5 days at their current usage rate, longer by 0.6 day from the previous period, Mysteel assessed.

However, more BF mills managed to secure positive profit margins during the latest survey period, thanks to the rebound in domestic prices of finished steel products. As of December 4, around 36% of the 247 BF mills under Mysteel’s tracking could make some profits from steel sales, 1 percentage point higher than a week earlier.

By the same day, China’s national spot price for HRB400E 20mm diameter rebar was assessed by Mysteel at Yuan 3,327/tonne ($471/t) including the 13% VAT as of December 4, up by 1.2% on week.

Note: This article has been written in accordance with a content exchange agreement between MySteel Global and BigMint.