Chinese BF mills' capacity use rises further to 87.67%

Production among Chinese blast furnace (BF) steelmakers continued climbing this week with the mills bringing more furnaces back on stream after completing maintenance works, Mysteel's survey showed. The ramp-up of production may slow down due to their shrinking steel margins, however.

During 6-9 May, the BF capacity utilisation rates among the 247 steelmakers under Mysteel's regular tracking averaged 87.67%, higher by 0.64 percentage point from that recorded during the country's national Labour Day holiday over 1-5 May when steelmakers generally maintained normal production.

During the latest survey period, the hot metal production among these sampled steelmakers also increased by 17,200 tonnes (t)/day (d) or 0.7% from the prior period to reach 2.35 million t/d, while their average operational rate went up by 1.07 percentage points to 81.5%.

In parallel with the growth of steel production, domestic mills' immediate demand for feed materials increased as well, Mysteel Global noted.

Over 6-9 May, the daily consumption of imported iron ore by the same 247 steel mills averaged 2.9 million t/d, higher by 53,700 t/d or 1.9% from the pre-holiday level, Mysteel's tracking found.

This led the iron ore inventories at steelmakers to draw lower after the holiday, when steel mills were not active in replenishing their ore inventories amid a less optimistic outlook for domestic steel consumption, as reported.

Consequently, the total inventories of imported iron ore held by the 247 mills under Mysteel's survey fell to 93.2 million tonnes (mnt) as of 9 May, lower by 2 mnt or 2.1% from 30 April. The stocks would be sufficient to last them for 32.6 days at their current use rate, 1.4 days shorter than the pre-holiday level, Mysteel assessed.

On the other hand, domestic BF steel mills are likely to be more cautious about lifting output, since their steel margins start to shrink, the survey showed.

By Thursday, around 52% of the same 247 steel mills Mysteel tracks could earn profits on selling their steel products, lower by some 1 percentage point compared to end-April.

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