China's blast furnace capacity use eases further to 90.6%

The blast furnace (BF) capacity utilization rate operated by the 247 Chinese steel mills under Mysteel's regular survey dipped for the second straight week by another 0.87 percentage point on week to 90.63% over April 21-27, as more steel mills started to conduct maintenance on steelmaking facilities due to negative profit margins, market sources observed.

Accordingly, the combined hot metal output among these sampled mills averaged 2.44 million tonnes/day over the same period, lower by 23,400 t/d on week, and the operational rate of their BFs also dropped 8.1 percentage points on week to 82.56%, according to the survey.

In North China's Shanxi, 10 BFs have been scheduled to undergo overhaul since this week, which is likely to reduce some 20% of the province's daily hot metal output, according to a market watcher based in Shanghai.

Meanwhile, as of April 25, more than 30 steel mills across China had announced their maintenance plans on BFs because the slump in finished steel prices caused their profit margins to shrink sharply, Mysteel learned.

Mysteel's survey showed that only 26.4% of the 247 surveyed mills managed to enjoy some healthy profits by Thursday, when China's national price of HRB400E 20mm dia rebar under Mysteel's assessment dropped Yuan 174/tonne ($25.1/t) on week to Yuan 3,888/t including the 13% VAT by the same day.

Steel mills' production cuts also led their iron ore demand to decline, with the daily consumption of imported iron ore among the 247 steelmakers dipping 28,200 t/d on week to 2.95 million t/d, according to Mysteel's survey.

As such, the 247 mills saw higher imported iron ore inventories in all forms including the volumes at steelworks, port stockyards and on the water, which in total increased by 1.7 million tonnes or 1.9% on week to reach 92.9 million tonnes as of April 27. The total volume would be sufficient for 31.47 days of their use, or 0.87 day longer than the previous survey week.

Written by Anthea Shi, shihui@mysteel.com
Edited by Alyssa Ren, rentingting@mysteel.com

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