Over June 16-22, Chinese steelmakers consumed less imported iron ore sintering fines compared to the previous week, as some mills started idling sintering machines to conduct maintenance, respondents to Mysteel’s regular survey indicated. Stocks of imported ore also declined.
The daily use of imported sintering fines among the 64 steel mills Mysteel regularly samples had dipped to 545,900 tonnes/day on average as of June 22, lower by 12,700 t/d or 2.3% on week, the survey results showed.
Over the past week, some mills in North China’s Hebei province and in parts of South China halted sintering operations to perform routine maintenance on their machines. The stoppages were partly the mills’ making good on pledges to trim crude steel production this year, but also a reaction to the meagre or even negative margins they’re earning on finished steel these days, according to a Shanghai-based analyst.
For the time being, domestic steel demand is quite sluggish, dampened by both the downturn in the national economy and the heavy monsoon rains in South China, both of which have caused finished steel prices to plunge sharply. In fact, in view of the dull steel demand, many mills have opted to adjust their near-term production plans and advance some routine maintenance, as reported.
According to Mysteel’s tracking, the gross profit on billet sales earned by integrated steel mills in Tangshan, China’s top steel production city and billet supply base, had plummeted to an average loss of Yuan 414/tonne ($61.8/t) as of June 22, or down Yuan 286/t on week.
In this context, many steelmakers also scaled back iron ore buying over the past week, in line with their cutbacks in production, especially as ore prices have also tumbled dramatically. This led to a decline in overall iron ore stocks held by these steelmakers, Mysteel Global also observed.
Correspondingly, by June 22, inventories of imported fines at the 64 plants dropped by 955,500 tonnes or 6.1% on week to 14.63 million tonnes, Mysteel’s survey showed. The stocks of these fines held by mills were sufficient for 23 days’ use at their present daily consumption rate, or one day less than for the last survey period.
Written by Victoria Zou@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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