China's Blast furnace capacity use dips further to 79%

The blast furnace utilization rate among China's 247 steel mills under Mysteel's regular survey ease for the second week over October 22-28, though decline pace picked up to 1.22 percentage points on week to 78.83%, as more steel mills had trimmed production either on the request of their local authorities or in reaction to the recent softening in domestic steel prices.

During the latest survey period, these mills' daily molten iron output decreased for the second week too by another 32,700 tonnes/day to 2.11 million t/d in total, and the operational rate of their blast furnaces under the survey also slid more substantially in second week by another 1.66 percentage points on week to 74.9%.

This week, steel mills in North China's Shanxi, for example, have cut down on their steelmaking further in response to the provincial government's order on October 22 regarding winter restriction, according to a Shanghai-based market watcher.

Other than Shanxi, "the ongoing restriction on steel mills' sintering facilities in Tangshan (North China's Hebei) has also forced producers to bank some of their blast furnaces," she added.

Other than the government's commands, Chinese steel mills' production enthusiasm has been dampened by domestic steel price decline, as the national average price of the HRB400E 20mm dia rebar, for example, fell or a new low since September 2 as of October 28, or down Yuan 367/tonne ($57.4/t) on week to Yuan 5,357/t and including the 13% VAT, according to Mysteel's assessment.

As of October 28, Mysteel's survey among these 247 surveyed mills showed that their inventories of imported iron ore in all forms including the volumes at steelworks, port stockyards and on the water, ebbed after two weeks of inclines, down 175,800 tonnes on week to 104.2 million tonnes, in preparation for lower output in winter months.

These imported iron ore stocks will be sufficient for around 39.76 days of consumption, or 0.39 day longer on week, as their daily consumption of imported iron ore decreased by 30,300 t/d on week to 2.62 million t/d in total in line with lower steel output, Mysteel's data showed.

Over the same survey period, Mysteel's smaller-scale survey among China's 163 steel plants showed that their blast furnace capacity utilization rate edged down for the third week by 1.38 percentage points on week to 60.78% as of October 28.

Written by Lindsey Liu, liulingxian@mysteel.com

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