China: Blast furnace capacity use reverses from 7-week inclines

The blast furnace capacity utilization rate among the 247 Chinese steel mills Mysteel canvasses regularly reversed down over January 28-February 10 after seven weeks of inclines, easing by 4.94 percentage points on week to average 76.57% as of February 10, as some steel producers across the country had reined in their output on the request of local authorities.

During the survey period, these 247 mills' daily molten iron output fell too by 133,100 tonnes/day on week to 2.06 million t/d in total, and the operational rate of their blast furnaces decreased by a larger 6.67 percentage points from January 27 to 68.19% as of February 10, or a new low since December 2021.

"The decline in molten iron output was mainly from the northern and eastern areas of China, as many local steel mills had further trimmed their output (both in crude and finished steel) in response to the air quality control measures during the Winter Olympic Games (being held in and around Beijing over February 4-20)," a Shanghai-based market watcher said.

Local administrators in the regions around the Games venues had acted early in efforts to improve regional air quality, among them including some major steel-producing provinces such as North China's Hebei and Shanxi, Central China's Henan, and East China's Shandong. They have all imposed enhanced restrictions on local steelmakers since February 8, as reported.

In tandem, a total of 52 blast furnaces had been offline during the survey period, according to the market watcher. As a result, these 247 surveyed mills' consumption of imported iron ore dropped too by 186,100 t/d from January 27 to 2.53 million t/d on average as of February 10, according to Mysteel's data.

Also by February 10, inventories of imported ore in all forms at the 247 surveyed mills including ore sitting at steelworks, port stockyards and on the water, decreased by 7.23 million tonnes from January 27 to 110.3 million tonnes. The volumes would be sufficient for 43.56 days of their consumption, or 0.32 day longer than the previous survey period.

Written by Lindsey Liu, liulingxian@mysteel.com

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