China: Blast furnace mills' profits drop in October
Profits among the 91 Chinese blast-furnace steel mills sampled regularly by Mysteel suffered badly in October, mainly due to increased production costs and the substantia...
Profits among the 91 Chinese blast-furnace steel mills sampled regularly by Mysteel suffered badly in October, mainly due to increased production costs and the substantial fall in domestic steel prices.
Last month, rebar margins among steel mills under the survey reversed down for the first time in three months, sliding by Yuan 555/tonne ($86.8/t) on month to Yuan just 246/t, the latest survey released on November 9 found. The mills' costs for making molten iron grew further to an average of Yuan 3,490/t excluding the 13% VAT in October, rising by another Yuan 120/t or 3.6% from September because of higher raw materials prices including those of iron ore and coke.
For October, Mysteel SEADEX 62% Australian Fines recovered to an average of $120/dmt CFR Qingdao, up $3/t on month after slipping for the three prior months, while the price of class 2 metallurgical coke in North China averaged Yuan 4,073/t, according to Mysteel's assessment, up for the third month by another Yuan 252/t from September, the survey showed.
Chinese finished steel prices fell sharply in October, reflecting the lackluster demand from end-users and the negative sentiment prevailing in the domestic ferrous market. This also squeezed the profit margins of domestic steel producers, Mysteel Global noted.
For example, China's national price of HRB400E 20mm dia rebar was assessed by Mysteel at Yuan 5,361/t including the 13% VAT as of October 29, down Yuan 564/t on month. Also, the daily trading volume of rebar, wire rod and bar-in-coil among China's 237 traders under Mysteel's tracking averaged 175,957 tonnes/day last month, down 18.6% on month and far below the threshold of 200,000 t/d regarded as usual during the Autumn peak consumption season.
As for flats, the average margin on hot-rolled coil (HRC) that the 91 surveyed producers earned last month was Yuan 402/t, lower by a huge Yuan 417/t on month, as domestic prices of hot coil tumbled. As of October 29, the price of Q235 4.75mm HRC under Mysteel's assessment had decreased by Yuan 368/t on month to Yuan 5,463/t including the 13% VAT.
For October, medium plate margins among the 91 steel mills averaged Yuan 520/t, down by a similarly large Yuan 393/t from the prior month though this was a relatively small on-month fall compared with those for rebar and HRC, according to Mysteel's tracking.
Written by Nancy Zheng, zhengmm@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
