Chinese BF mills' production stops rising

Output among blast furnace (BF) steelmakers in China snapped a two-week rising streak and retreated this week as a few large-sized furnaces were shut off for maintenance, while the mills' profit margins shrank rapidly, Mysteel's latest survey showed.

During 21-27 June, the average BF capacity utilisation rates of the 247 Chinese steel mills under Mysteel's regular tracking lost 0.63 percentage point on week to reach 89.13%, and their daily hot metal output also decreased by 5,000 tonnes(t)/day or 0.2% on week to average 2.39 mnt/d.

Some mills in East, North, Northeast, and Central China blew off their furnaces this week to start maintenance work, the survey showed.

Meanwhile, the continuous slide in domestic steel prices kept squeezing the profit margins among steel mills, which further undermined their production enthusiasm, Mysteel Global learned.

For example, China's national spot price for the HRB400E 20mm dia rebar was assessed by Mysteel at yuan 3,632/t ($499.7/t) including the 13% VAT as of 27 June, lower by yuan 63/t or 1.7% on week.

By the same day, only around 43% of the 247 BF mills under Mysteel's tracking could earn some profits on their steel sales, lower by a marked 9 percentage points from the previous week.

In tandem with the decline in hot metal production, the daily consumption of imported iron ore at the same 247 steelmakers fell by 8,000 t/d or 0.3% on week to average 2.93 mnt/d during 21-27 January.

The thinner steel margins also made Chinese steelmakers more cautious about replenishing their feed stocks, Mysteel Global noted. By 27 June, the total inventories of imported iron ore in all forms held by the 247 mills dropped by 0.8% on week to 91.4 mnt, which would be sufficient to last them for 31.2 days at their current use rate, shorter by 0.2 day from the prior week, Mysteel assessed.

On the other hand, the average operational rate among these surveyed mills edged up by 0.3 percentage point on week to 83.11% over 21-27 June, as some mills brought their idled furnaces back on stream after completing the maintenance, thought their capacities were relatively small, Mysteel's survey showed.

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