China's blast furnace capacity use dips to 89.49%

The blast furnace (BF) capacity utilization rate among China's 247 Chinese steel mills under Mysteel's survey had dipped for the third week over April 28-May 4, down by another 1.14 percentage points on week to 89.49%. The further decline indicated that some of these surveyed mills had reined in their steel output amid thin margins and weak downstream demand.

During the latest survey period, the hot metal output of these survey mills decreased accordingly by 30,600 tonnes/day on week to 2.4 million t/d on average, while their BF operational rate slid for the third week too by another 0.87 percentage point on week to 81.69% as of May 4.

"Steel demand from downstream users has been lackluster mainly due to poor performance of the country's property market. This has also weighed on domestic steel prices and continued to squeeze steelmakers' profit margins, forcing them to cut production," a Shanghai-based market watcher noted.

For example, as of May 4, the national price of HRB400E 20mm dia rebar under Mysteel's assessment had declined by Yuan 43/tonne ($6.2/t) on week to Yuan 3,845/t and including the 13% VAT.

In tandem, Mysteel's survey showed that only 22.08% of the 247 mills managed to enjoy some healthy margins by Thursday, down 4.33 percentage points on week.

On the other hand, the mounting steel stocks held by domestic steel mills also prompted some steelmakers to conduct maintenance on their BF facilities, Mysteel Global noted.

The total inventories of the five major carbon steel items comprising rebar, wire rod, hot-rolled coil, cold-rolled coil, and medium plate had increased for the second week by another 1.6% on week to 5.82 million tonnes during April 27-May 3.

As a result, mills in North, East, Northeast, Central and Southwest China have idled a total of 11 BFs during the survey period, Mysteel Global learned from the survey.

On the other hand, lower steel output saw daily consumption of imported iron ore among the 247 surveyed mills decrease by 34,700 t/d on week to 2.92 million t/d on average over April 28-May 4.

The 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 4.52 million tonnes on week to 88.41 million tonnes as of May 4. The stocks were sufficient to last the surveyed mills for 30.29 days of use, or 1.18 days shorter than during the previous survey period.

Written by Lindsey Liu, liulingxian@mysteel.com

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