China's Blast furnace capacity use dips to 85.71%

Over July 1-7, the blast furnace capacity utilization rate among China's 247 steel mills under Mysteel's survey had dipped for the third week by another 1.9 percentage points on week to 85.71%, indicating that many of the surveyed mills had continued reining in output amid weak demand and their thin margins.

During the latest survey period, these mills' hot metal output had decreased accordingly by 51,200 tonnes/day on week to 2.31 million t/d on average, while their BF operational rate had slid for the fourth week by another 2.26 percentage points on week to 78.53% as of July 7.

"High summer temperatures in most regions of China have largely affected outdoor construction activities, leading to seasonal lukewarm steel demand in the physical market and thus weighing on domestic steel prices," a Shanghai-based market watcher observed.

As a result, the declining steel prices have further squeezed many steelmakers' profit margins or even added their losses, forcing them to cut production to avoid more losses, Mysteel Global noted.

For example, as of July 7, the national price of HRB400E 20mm dia rebar under Mysteel's assessment had declined by Yuan 83/tonne ($12.4/t) on week to Yuan 4,282/t and including the 13% VAT.

Over July 1-7, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among 237 Chinese trading houses under Mysteel's survey averaged at a relatively low level of 153,596 tonne/day, down 9% on week.

Subsequently, lower steel output saw the daily consumption of imported iron ore among the 247 surveyed mills decrease by 65,200 t/d on week to 2.8 million t/d on average over July 1-7.

By July 7, total inventories of imported iron ore in all forms including the volumes at steelworks, port stockyards and on the water held by these 247 mills had edged down by 516,400 tonnes on week to 104.9 million tonnes. The stocks were sufficient to last the surveyed mills for 37.45 days of use, or 0.67 day longer than during the previous survey period.

Written by Lindsey Liu, liulingxian@mysteel.com

Note: This article has been published in accordance with an article exchange agreement between Mysteel Global and SteelMint.