- Rising raw material costs pressured steelmakers’ profitability.
- Only 32% of BF mills remained profitable.
Production activity among Chinese blast furnace (BF) steelmakers continued to slide in the past week as elevated feed material costs continued to squeeze their profit margins despite the recent rally in finished steel prices, Mysteel’s latest survey showed.
The average capacity utilization rate among the 247 BF steelmakers under Mysteel’s tracking slipped for the second straight week by another 0.41% point to reach 88.84% during 21-27 August, with the combined daily hot metal output falling 0.45% on week to 2.37 million tonnes/day.
During the same survey period, the average operational rate among these 247 BF mills ended a three-week rise and retreated 0.48% point on week to sit at 82.32%, the survey results showed.
Some steelmakers blew off their blast furnaces to start regular maintenance, while other mills scaled back production to avoid losing more money, as the firming prices of raw materials kept lifting the input costs of ironmaking among mills, Mysteel Global noted.
For example, Mysteel PORTDEX 62% Australian Fines came in at RMB 700/wmt ($104.2/wmt) FOT on 27 August, higher by 1.2% on week, while the national composite spot price for coking coal under Mysteel’s assessment jumped 11.1% on week to RMB 2,098/t, both including the 13% VAT. Similarly, the coke market witnessed two rounds of price hikes totaling RMB 150-165/t this week, as reported.
Under such circumstances, most BF mills continued to suffer negative steel margins during the latest survey week. Among the 247 BF steel mills surveyed, only around 32% could make some profits on selling their steel products by 27 August, unchanged from the previous week, according to Mysteel’s tracking.
In parallel with the decrease in their hot metal production, the total consumption of imported iron ore by the 247 BF steelmakers Mysteel monitors also slid 0.4% on week to average 2.88 million t/d during 21-27 August.
By 27 August, the total inventories of imported iron ore in all forms held by the same 247 mills-including those at their works, in transit, and at ports-fell 0.6% from a week earlier to 88.6 million tonnes (mnt), the survey showed. The existing stocks would be sufficient to last these mills for 30.7 days at their current usage rate, shorter by 0.1 day from the previous period, Mysteel assessed.
This article is published as part of a content sharing agreement between Mysteel Global and BigMint
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