China: Blast furnace mills' profits grow further in Aug

Profits among the 91 Chinese blast-furnace steel mills sampled regularly by Mysteel continued to grow in August, thanks to the further decrease in their steelmaking costs with the lower price of imported iron ore.

Mysteel's latest monthly survey released on September 6 showed that the average margins the sampled mills earned on rebar sales came in at Yuan 408/tonne ($63/t) last month, up for the second month by another Yuan 297/t from the average for July.

The profits that the surveyed steel mills earned on flat steel sales were also better in August, with that for hot-rolled coil (HRC) leaping by Yuan 675/t on month to average Yuan 852/t, and that for medium plates reaching Yuan 748/t, up another Yuan 558/t from the prior month, the survey showed.

Chinese steel mills' production costs decreased further last month thanks to the continuous decrease in prices of imported iron ore. Last month, the cost of making molten iron among the surveyed 91 BF mills was assessed by Mysteel at Yuan 3,260/t excluding the 13% VAT on average, down Yuan 188/t or 5.4% on month.

During the month, Mysteel SEADEX 62% Australian Fines averaged $158/dmt CFR Qingdao, seeing a sharper fall of $52/dmt on month against the on-month dip of $3/dmt over the prior month. This also offset the growth in coke prices.

Last month according to Mysteel's assessment, the price of secondary metallurgical coke in North China averaged Yuan 2,987/t in August, reversing up Yuan 277/t on month after the decrease in July, according to the survey.

China's finished steel prices were rangebound last month, with the national price of HRB400E 20mm dia rebar assessed by Mysteel averaging Yuan 5,320/t including the 13% VAT, higher by only Yuan 77/t on month, which also contributed to the better profit margins of domestic steel mills.

However, steel demand from end-users remained lacklustre as August is the traditionally the off season for steel consumption in China when high temperatures and heavy rainfalls affect most regions of the country

For example, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 Chinese traders under Mysteel's monitoring averaged 184,686 tonnes/day in August, down 2,732 t/d or 1.5% from that for July.

Written by Nancy Zheng, zhengmm@mysteel.com

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