Blast furnace pellet feeds in China at 5-month low

The ratio of pellet feeds in blast furnaces (BFs) among 114 Chinese steelmakers included in Mysteel's survey touched a five-month low of 16.01% as of February 1, falling by 0.59 percentage points on month and reflecting steel mills' less preference in consuming the feed amid their thin steel margins and stalled steel consumption among end-users, market sources shared.

In fact, the pellet blending ratio in BFs at these sampled mills had stayed below 17% since last July, when steel mills nationwide started enduring meager margins on finished steel sales, Mysteel Global noted. And the ratio dropped more notably last month.

Fundamentally, most mills were inclined to use lower-grade ore other than pellets in their steel production because they still suffered negative margins. For example, Mysteel's tracking showed that the average loss on rebar sales among China's BF steel mills was Yuan 65.4/tonne ($9.7/t) on February 1, though narrowing by Yuan 145.3/t from January 3.

On the other hand, "production enthusiasm among mills was not that strong now, because uncertainties remain in steel consumption recovery in the near term despite the bullish sentiment having prevailed in China's steel market since last November," a Shanghai-based market watcher explained to mills' weakened demand for pellets.

Steelmakers' shrinking demand saw pellets stocks at China's 45 major ports under Mysteel's survey swell to a two-year high of 6.2 million tonnes over January 20-27, up for the fourth straight week by another 4.4% on week, the latest survey showed.

Written by Lea Li, liye@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.