China: Blast furnace mills' profits shrink further in Nov

Profit margins among the 91 Chinese blast-furnace steel mills sampled regularly by Mysteel shrank further in November due to the sharper fall in domestic steel prices, despite the decrease in their production costs with the falls in raw material prices.

Average rebar margins among the steel mills under Mysteel's survey slipped further for the second month in November, declining by another Yuan 108/tonne ($17/t) on month to Yuan 138/t, while the average margin on hot-rolled coil (HRC) that the surveyed producers earned was Yuan 154/t, lower by a huge Yuan 248/t on month.

Last month, the surveyed steel mills made a bit more money on their sales of medium plate compared with rebar and HRC, though the plate profits also declined by Yuan 240/t from the prior month to Yuan 280/t, the survey showed.

However, the decrease in profits of the surveyed mills slowed down somewhat in November, as domestic steel mills' production costs also decreased from weakening raw materials prices, including those of coke and imported iron ore.

For November, the surveyed mills' costs for making molten iron came in at Yuan 3,280t excluding the 13% VAT, lower by Yuan 210/t or 6% on month. Last month, Mysteel SEADEX 62% Australian Fines averaged $95/dmt CFR Qingdao - substantial decrease of $25/dmt from the average in October. The price of class 2 metallurgical coke in North China posted a sharper fall of Yuan 617/t on month to Yuan 3,456/t on average, according to Mysteel's survey.

Chinese finished steel prices continued to rapidly lose ground last month, as sentiment in the domestic market remained negative, cooled by the lackluster end-user demand in winter, Mysteel Global noted.

For example, China's national price of HRB400E 20mm dia rebar was assessed by Mysteel at Yuan 4,774/t including the 13% VAT as of November 30, losing another Yuan 587/t from the end of October.

At the same time, the daily trading volume of rebar, wire rod and bar-in-coil among China's 237 traders under Mysteel's tracking averaged 179,568 tonnes/day in November, still at a low level though it was 3,611 t/d or 2.1% higher from the average for October.

Written by Nancy Zheng, zhengmm@mysteel.com

This article has ben published under an article exchange agreement between Mysteel and SteelMint Research