China's blast furnace capacity use remains stable at 82.62%

The blast furnace (BF) capacity utilization rate among 247 Chinese steel mills under Mysteel's survey remained steady at 82.62% over November 25-December 1, or up by a tiny 0.1 percentage point on week after dipping for six consecutive weeks, though the overall BF operational rate eased.

During the latest period, the surveyed mills saw their daily hot metal output only nudge up by 2,500 tonnes/day on week to 2.23 million t/d in total, while their BF operational rate decreased by 1.43 percentage points on week to 75.61% as of December 1.

"Last week, certain mills across the country carried out maintenance works on their BFs to ease some of the pressure from high production costs and the weakening of downstream demand for steel," a Shanghai-based market watcher commented.

"However, some mills in East China still resumed BF operations after completing their maintenance works, so the situation was mixed," she explained.

In general, China's sluggish demand for finished steel during the winter season would weigh on steel prices and squeeze mills' profit margins, Mysteel Global notes.

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 survey only averaged at a low level of 133,600 t/d over November 25-December 1, or down 4% from the previous week.

As a result, another 13 BFs nationwide had been idled over the survey period, while three large-sized BFs were resumed, the market watcher shared.

Accordingly, the daily consumption of imported iron ore among the 247 sampled mills nudged up by 12,100 t/d on week to 2.77 million t/d on average during the same period.

By Thursday, 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 climbed by 501,600 tonnes on week to 91.48 million tonnes. The total tonnage would be sufficient for 33.06 days of use, or 0.04 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.