China: BF mills’ production retreats again as losses widen

• Hot metal output falls despite furnace restarts
• Only 8% of mills make profits on steel sales

After a brief rebound in the previous week, production among Chinese blast-furnace (BF) steelmakers pulled back again as mills reined in production amid negative margins, Mysteel’s latest survey showed.

The average capacity utilisation rate among the 247 BF steelmakers Mysteel tracks nationwide dipped 0.19 percentage point on week to 88.73% during 4-10 September, although their average operational rate increased 0.48 percentage point from the prior week to 83.12%.

As such, the combined daily hot metal output among these 247 mills slipped 0.2% on week to average 2.36 million tonnes/day (mnt/d) over the same survey period, the survey results showed.

During the latest survey week, some integrated steel mills brought their idled blast furnaces back onstream after completing maintenance work, but more mills scaled back production as their operation margins worsened, Mysteel Global learnt.

The sustained price gains of key raw materials such as coking coal and coke have sharply raised steelmakers’ input costs, pushing more mills into red this week, Mysteel’s other survey indicated.

As of 10 September, China’s composite spot price index for coking coal was assessed by Mysteel at RMB 2,277.5/tonne (t) ($340/t), higher by 1% from a week earlier, while the country’s national steel price index was largely unchanged on week at RMB 3,493/t by the same day, both including the 13% VAT.

By the same day, only around 8% of the 247 BF steelmakers under Mysteel’s monitoring could make some profits on selling their steel products, down by a substantial 22 percentage points from the previous week.

On the other hand, the total consumption of imported iron ore by these 247 steelmakers edged up 0.6% on week to average 2.9 (mnt/d) during 4-10 September.

The total inventories of imported iron ore held by the same 247 mills – including those at their works, in transit, and at ports – edged up 0.5% on week to reach 89 (mnt). The existing stocks would be sufficient to last these mills for 30.7 days at their current usage rate, largely unchanged from the previous week, Mysteel’s survey showed.

Note: This article is published as part of a content exchange agreement between Mysteel Global and BigMint.