China: BF mills’ output falls further amid thinning margins

• Strengthening iron ore, coke prices squeeze margins
• Only 35% of tracked BF mills making profits on steel sales

Mysteel Global: Production among Chinese blast furnace (BF) steel producers continued to shrink during 21-27 November as more mills started maintenance works, Mysteel’s latest survey showed. Widening losses on steel sales dampened mills’ production enthusiasm as well.

During the latest survey period, the average capacity utilisation rate among the 247 BF steelmakers nationwide under Mysteel’s regular tracking slid for the second straight week by another 0.6 percentage point w-o-w to 88%, with their combined output of hot metal falling by 0.7% from the prior week to 2.35 million tonnes (mnt)/day.

During the same period, the average operational rate among these sampled mills dropped by a larger 1.1 percentage points to 81.1%, the survey showed.

Some steelmakers in North and Southwest China halted operations to conduct maintenance on their furnaces, a major cause of the decline in national hot metal production overall, Mysteel Global learnt.

Meanwhile, more BF mills reined in production because they were suffering deeper profit losses in the past few days, according to the survey. As of 27 November, only around 35% of the 247 BF mills under Mysteel’s monitoring could make some profits on steel sales, lower by 3 percentage points from a week earlier.

Squeezing the margins was mainly the strengthening of the prices for feed materials such as iron ore and coke, Mysteel Global learnt.

In tandem with the decrease in hot metal output, the total consumption of imported iron ore by the 247 BF steelmakers Mysteel tracks averaged 2.89 mnt/d during 21-27 November, lower by 0.8% from the previous week.

Meanwhile, these steel mills were cautious about replenishing iron ore due to the rising prices of the feedstock, Mysteel Global noted.

As of 27 November, the total inventories of imported iron ore in all forms held by the sampled 247 mills slid by 0.7% from a week earlier to 89.4 mnt, which would be sufficient to last these mills for 30.9 days at their current usage rate, unchanged 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.