China's blast furnace capacity use lowers to 89%

Over June 17-23, the blast furnace (BF) capacity utilization rate among China's 247 steel mills Mysteel canvasses weekly reversed down after rising for eight weeks, dropping by 1.17 percentage points on week to 89% as of June 23, due to thinned steel margins and low-demand season of summer.

During the latest survey period, these mills' hot metal output decreased accordingly by 36,400 tonnes/day on week to 2.4 million t/d on average, while their BF operational rate had slid for the second week by another 1.9 percentage points on week to 81.92% as of June 23.

"Negative sentiment has prevailed in China's domestic steel market as demand from end-users remained slack during the traditional off-season for steel consumption," a Shanghai-based market watcher commented.

The pessimism in the market had led to a recent plunge in Chinese finished steel prices and thus further squeezed mills' profit margins or even deepened their losses, forcing mills in many regions to rein in output, according to her, adding that a total of 21 blast furnaces were idled during the period.

As of June 23, the national price of HRB400E 20mm dia rebar under Mysteel's assessment had fallen to an over 18-month low of Yuan 4,283/tonne ($640/t), down Yuan 370/t on week.

Accordingly, during June 17-23, the daily consumption of imported iron ore among the 247 surveyed mills decreased by 55,100 t/d on week to 2.91 million t/d on average.

As of June 23, 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 edged down by 2.2 million tonnes on week to 107.1 million tonnes. The stocks were sufficient to last the surveyed mills for 36.79 days of use, or 0.05 day shorter 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.