Chinese BF mills' capacity use rebounds to 89.2%

MySteel Global: Blast furnace (BF) production among Chinese steelmakers ended a three-week drop and increased this week as some idled furnaces were brought back onstream, though many mills were still suffering negative margins, Mysteel's latest survey showed.

During 12-18 July, the average capacity utilisation rate among the 247 steel producers under Mysteel's regular tracking increased by 0.92 percentage point on week to reach 89.62%, with their hot metal output averaging 2.4 million tonnes(mnt)/day, higher by 13,600 tonnes (t)/day (d) or 0.57% from the prior week.

Over the same period, the average operational rate of these sampled 247 mills also went up by 0.13 percentage point on week to reach 82.63%, the survey showed.

"A few large furnaces in North and Northeast China were ignited this week after the maintenance on them had been completed, which contributed the most to the rise in the hot metal output," a market analyst based in Shanghai said.

In parallel with the growing production, the daily consumption of the imported iron ore among the same 247 steelmakers Mysteel tracks climbed 16,800 t/d or 0.6% from the previous week to average 2.93 million t/d over 12-18 July.

However, these BF steel mills' may not continue to lift their production next week, considering that the recent drops in steel prices led more mills to suffer losses on selling steel, Mysteel's survey suggested.

By 18 July, for example, China's national spot prices of HRB400E 20mm dia rebar price lost yuan 20/t ($2.8/t) on week to reach yuan 3,578/t including the 13% VAT, refreshing the lowest level since early April 2020. On the same day, only around 32% of the 247 BF steelmakers under Mysteel's tracking could make some profits, lower by some 5 percentage points from a week earlier.

As of Thursday, the total inventories of imported iron ore held by the same 247 steel mills dropped by 902,200 t or 1% on week to reach 92.3 mnt, which would be sufficient to last them for 31.5 days at their current usage rate, shorter by 0.5 day from the previous period, Mysteel assessed.

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