China’s steel sector profits fell on the back of lower steel prices, increase in output and high iron ore prices in the Jan-May’20 period.
Operating revenue of the steel sector in May was at RMB604.65 billion, down by 0.9% y-o-y while profits were at RMB18.7 billion, down by 50.6% y-o-y, according to the National Bureau of Statistics. Jan-May operating revenue was at RMB2.55 trillion, down by 6% y-o-y and total profits were at RMB49.33 billion, down by 57.2% y-o-y.
In May, the China steel index price averaged at 99.8 points, down by 10.8% y-o-y, while the average price index for Jan-May was at 100.3 points, down by 8.3% y-o-y.
High output weighs: Output of pig iron, crude steel and finished steel were at 360mn t, 410mn t and 490mn t, up by 1.5%,1.9% and 1.2% y-o-y respectively in Jan-May. Pig iron, crude steel and finished steel output was at 77.32mn t, 92.27mn t and 114.53mn t in May, up by 2.4%, 4.2% and 6.2% y-o-y respectively.
Stocks fall: Steel stocks, however, fell at both mills and traders which typically indicates faster offtake of products. CISA data showed that in late May, the steel stock at CISA-affiliated mills was at 13.28 mn t, down by 8.13 mn t or 38% from the peak for the year seen in early March. Stocks of five major steel categories in 20 key cities was at 13.12 mn t, down by 7.09 mn t or 35.1% lower from the 2020 peak in early March, a continuous decline for 80 days.
Exports sink: Cumulative export of steel in May was 4.40mn t, down by 23.4% y-o-y while imports were up by 30.3% y-o-y at 1.28mn t. Global slowdown in steel demand due to coronavirus-related lockdown slowed Chinese exports while relatively higher China steel prices encouraged more inflow of HRC and billet into the Chinese market. During Jan-May, the cumulative export of steel was 25 mn t, down by 14% y-o-y while import was at 5.46 mn tons, up by 12% y-o-y, according to customs data.
Iron ore price rise: In May, the composite index price of China iron ore, including imported and domestic ores, averaged at 335.6 points, up by 8.6% m-o-m. The average index price of imported iron ore was at 339 points, up by 10.1% m-o-m. Cumulative average composite index price was at 325.2 points, up by 4.3% y-o-y in Jan-May and averaged imported iron ore index price was at 326.3 points, up by 2% y-o-y.
Ferrous mining profits rise: Higher iron ore prices lifted the operating revenue of ferro metal mining and beneficiation sector to RMB135.91billion during Jan-May, up by 1% y-o-y, while total profit was RMB10.18 billion, up by 20.9% y-o-y.
Photo Credit – World Steel
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