China's blast furnace capacity use falls for 3rd consecutive week

The blast furnace (BF) capacity utilization rate among 247 Chinese steel mills under Mysteel's survey had dipped for the third straight week by another 1.32 percentage points on week to 86.31% over October 28-November 3, indicating that some of the surveyed mills had continued reining in their output amid persistent profit losses and lukewarm steel demand from downstream users.

During the latest survey period, these mills' hot metal output decreased accordingly by another 35,600 tonnes/day on week to 2.33 million t/d on average, while their BF operational rate had slid for the fourth week by 2.71 percentage points on week to 78.77% as of November 3.

"The approach of cold weather in some regions of China has largely affected outdoor construction activities, leading to seasonal slack steel demand in the physical market, which will further weigh on steel prices," a Shanghai-based market watcher commented.

For example, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among 237 Chinese trading houses under Mysteel's tracking averaged at a relatively low level of 158,626 t/d over October 29-November 3.

And the national price of HRB400E 20mm dia rebar under Mysteel's assessment had declined by Yuan 99/tonne ($13.5/t) on week to Yuan 3,890/t and including the 13% VAT as of November 3.

Meanwhile, Mysteel's other survey showed that only 9.96% of these 247 mills were making profits as of Thursday, down by 17.75 percentage points on week and 61.9 percentage points on year, or hitting a new low since January 2016.

Under such circumstances, steel mills across China had idled 22 BFs over the survey period, according to the market watcher.

Consequently, lower steel output saw the daily consumption of imported iron ore among the 247 surveyed mills decrease by 34,300 t/d on week to 2.89 million t/d on average over October 28-November 3.

By Thursday, these 247 mills' total inventories of imported iron ore in all forms including the volumes at steelworks, port stockyards and on the water edged down by 383,600 tonnes on week to 93.75 million tonnes. The stocks were sufficient to last the surveyed mills for 32.39 days of use, or 0.25 day longer than 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.