China's blast furnace capacity use dips further to 88.17%

The production among Chinese blast furnace (BF) steel mills continued nudging down during this week as the mills saw their profit margins shrink again, while domestic steel demand showed no sign of growth, Mysteel's latest survey showed.

Over May 24-30, the average BF capacity utilization rate of the 247 steelmakers under Mysteel's regular tracking lost another 0.37 percentage points on week to reach 88.17%, with their hot metal output sliding 0.4% from the previous week to 2.36 million tonnes/day.

However, the average operational rate among these sampled 247 mills picked up 0.15 percentage point on week to reach 81.65% over the same period, as the surveyed mills restarted more furnaces than those they blew off, the survey showed.

The mounting inventories of finished steel products among domestic steelmakers, plus the decline of spot transactions in the steel market, reflected the fact that domestic steel demand remained lukewarm, as Mysteel Global reported.

Meanwhile, steelmakers started to lose money again with the finished steel prices falling this week, Mysteel Global learned. By Thursday, around 53% of the 247 steel mills Mysteel tracks could earn some profits on steel sales, lower by 1 percentage point from the previous week.

In parallel with the decrease in the mills' production, the daily consumption of imported iron ore among the same 247 steelmakers also declined, falling 19,200 t/d or 0.7% on week to 2.88 million t/d during May 24-30, according to Mysteel's tracking.

In response to their thinner margins, domestic steel mills were more cautious about procuring iron ore, with most mills only buying the tonnage for their immediate production needs, market sources observed.

By May 30, the total inventories of imported iron ore held by the 247 steel mills under Mysteel's survey reversed from the prior week's increase and dropped 1.4 million tonnes or 1.4% on week to reach 92 million tonnes. The stocks would be sufficient to last them for 32 days at their current use rate, shorter by 0.3 days than the previous period, Mysteel assessed.

Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.