- Stable iron ore, rising coke tags keep input costs elevated
- Finished steel prices decrease amid subdued demand
Mysteel Global: The margins earned by China’s blast-furnace (BF) steel mills continued to worsen in October, mainly due to the continuous rise in their production costs and the weakness in finished steel prices, according to Mysteel’s latest monthly survey.
Last month, the sampled steelmakers posted an average loss of RMB 106/tonne (t) ($14.9/t) on rebar sales, deepening by RMB 46/t from the prior month, while their average loss on sales of hot-rolled coil (HRC) reached RMB 24/t in contrast to the profit of RMB 69/t in September.
The findings also showed that last month, the domestic BF steel mills tracked by Mysteel earned money when selling medium plates, although their average margins shrank to RMB 13/t from RMB 145/t in September.
The BF mills’ production costs increased in October, with the firming prices of major steelmaking raw materials squeezing their margins, Mysteel Global noted.
Last month, the average production cost for making rebars among the sampled BF steelmakers reached RMB 3,137/t including the 13% VAT, up by RMB 31/t m-o-m. Meanwhile, their average cost for making HRC and medium plate also increased by RMB 21/t and RMB 27/t, respectively, m-o-m to RMB 3,304/t and RMB 3,345/t, including VAT.
During October, the Mysteel SEADEX 62% Australian Fines iron ore index was stable m-o-m at $105/dmt CFR Qingdao on average, while prices of second-grade metallurgical coke in North China averaged RMB 1,436/t, rising by RMB 26/t from September, according to the survey.
However, China’s finished steel prices remained weak overall last month, as demand from end-users failed to meet market expectations for October, traditionally a strong month for steel consumption.
Mysteel’s assessment showed that as of 31 October, China’s national prices of HRB400E 20mm dia rebar stood at RMB 3,260/t, including 13% VAT, lower by a small RMB 1/t m-o-m, while national prices of Q235 4.75mm HRC had slipped by RMB 33/t from the end of September to RMB 3,365/t, including 13% VAT.
Transactions for finished steel in the physical market slowed in October, with the daily trading volume of construction steel comprising rebars, wire rods, and bar-in-coil among the 237 Chinese trading houses under Mysteel’s regular tracking averaging 101,282 tonnes (t)/day, lower by 1,154 t/d from the average for September.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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