China: BF mills’ output dips; profits grow further

• Crude steel output falls amid BF maintenance
• Strong rally in finished prices boosts profits

Mysteel: Production among Chinese blast furnace (BF) steel producers pulled back slightly during 18-24 July due to maintenance disruptions, while more mills enjoyed positive profit margins amid rising steel prices, Mysteel’s survey showed.

During the latest survey period, the average capacity utilisation rate at the 247 BF steelmakers under Mysteel’s regular tracking reversed the prior week’s rise and dipped 0.1 percentage point w-o-w to 90.8%, with their combined hot metal output decreasing 0.1% w-o-w to 2.42 million tonnes (mnt)/day. These mills’ operational rates stood unchanged from the prior week at 83.5% on average, the survey showed.

This week, among the sampled mills, one blast furnace in Northeast China was blown off for maintenance, while another idled furnace was brought back on stream. The capacity suspended was larger than that restarted, Mysteel Global noted.

Despite the small retreat in hot metal production, the total consumption of imported iron ore by the 247 BF mills Mysteel monitors picked up 0.9% w-o-w to 3.01 mnt/day during 18-24 July. Integrated steelmakers tended to use more imported iron ore instead of domestic material as their feed material, as imported cargoes offered a price advantage, Mysteel’s other survey showed.

As of 24 July, the total inventories of imported iron ore in all forms held by the 247 steelmakers under Mysteel’s tracking dropped by 1.8% from a week earlier to 88.2 mnt. The existing stocks would be sufficient to last these mills for 29.3 days at their current usage rate, shorter by 0.8 day from the previous period, Mysteel assessed.

Domestic BF steelmakers’ enthusiasm for production may strengthen again in the coming week as more mills have managed to break away from earlier losses thanks to the recent strong rally in the prices of finished steel products, Mysteel’s survey suggests.

By 24 July, around 64% of the 247 BF mills Mysteel tracks could make some profits on steel sales, higher by 4 percentage points from the prior week.

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