China's hot metal output to rebound in Oct'24

MySteel: Daily hot metal production among the 247 Chinese blast-furnace (BF) steelmakers sampled in Mysteel's regular survey has dipped this month. However, in October the daily output is expected to rebound, Mysteel suggested in its latest monthly report on domestic BF operations. The report argued that mills will be encouraged by robust steel demand and policy stimulus to produce more.

Over 1-26 September, the daily hot metal output of the sampled mills averaged 2.24 million tonnes (mnt)/day (d), 18,900 tonnes (t)/d or 0.8% lower than August's daily average of 2.26 mnt/d. The reduction was mostly observed in mills located in Northeast, Southwest, and North China, according to Mysteel's tracking.

During October, ten BFs with a total pig iron capacity of 34,400 t/d will be brought back online after maintenance, outstripping the 24,500 t/d capacity of the five BFs that are scheduled to be idled for overhauls, Mysteel's findings showed.

Based on the survey results, Mysteel forecasts that daily hot metal production among the 247 surveyed steelmakers will rise to 2.27 million t/d next month, up by 25,600 t/d or 1.1% from the daily average so far this month.

"In previous years, hot metal output among domestic mills has tended to retreat in October, but things could be different this year," a Shanghai-based analyst said, explaining that mills slashed their production in August due to severe losses and have been slowly lifting their output from earlier this month after their losses had eased.

Meanwhile, the recent stimulus package unveiled by China's government to bolster the domestic economy has driven up steel prices, which also bodes well for the profitability and production zest of mills, the report noted.

As of 26 September, the national spot price of HRB400E 20mm diameter rebar was assessed by Mysteel at yuan 3,485/tonne ($496.9/t) including the 13% VAT, higher by 3.2% per week. The stronger steel prices allowed around 19% of the 247 steel mills Mysteel tracks to earn some money on steel sales by the same day, 9 percentage points higher than a week earlier.

Many market pundits expect that the central government's monetary easing policies could be followed by more fiscal ones shortly. If so, the impetus from the positive macro front, together with October usually being a strong month for steel demand, is likely to help mills recover more profits, leading them to be more active in ramping up output in the coming month.

Under this scenario, daily hot metal production among the 247 BF steelmakers has the potential to reach an average of 2.28 mnt/d throughout October, the report added.

Note: This report has been written by an article exchange agreement between MySteel Global and BigMint.