Chinese BF mills suffer heavy losses on steel sales in July'24

MySteel Global: Chinese blast-furnace (BF) steel mills suffered more losses on finished steel sales in July, as the negative sentiment in the domestic market caused steel prices to fall sharply, according to Mysteel's latest monthly survey among the 91 BF mills under its tracking.

Last month, the average loss on rebar sales among the sampled Chinese steel producers came in at Yuan 249/tonne ($35/t), deepening by Yuan 151/t from the prior month.

Meanwhile, the surveyed BF mills lost an average of Yuan 150/t on sales of hot-rolled coil (HRC) in July, as against the profit of Yuan 19/t in June, while their average loss on sales of medium plate widened by Yuan 75/t on month to reach Yuan 90/t, the survey results showed.

The rapid expansion in the Chinese mills' losses was mainly blamed on the fast fall in finished steel prices, as demand from end-users remained dull during the usual summer lull, with the high temperatures and frequent heavy rains in most regions of China impacting user industries such as construction.

Besides, during July many domestic rebar mills and traders made more concessions in their offering prices to facilitate sales and so reduce their stocks at hand. Both need to clear their yards of existing rebars before new production and quality standards for rebars take effect on September 25, as reported.

China's finished steel prices dropped further in July, with the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment under Mysteel's assessment, reaching Yuan 3,381/t including the 13% VAT as of July 31, lower by Yuan 245/t on month.

By the end of July, the price of Q235 4.75mm HRC had slipped by Yuan 239/t on month to Yuan 3,488/t including the 13% VAT, according to Mysteel's assessment.

Finished steel sales in the spot market stayed low, with the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 traders under Mysteel's tracking averaging 116,495 tonnes/day in July, lower by another 2,917 t/d from June.

Chinese steel mills' production costs also declined somewhat last month, but the reduction could not improve their profitability as the limited decrease was offset by the substantial fall in finished steel prices, Mysteel Global noted.

For July, the cost of making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,675/t excluding the 13% VAT, slipping by Yuan 40/t or 1.5% on month, mainly due to the lower prices of some steelmaking raw materials such as iron ore, according to the survey.

Last month, the Mysteel SEADEX 62% Australian Fines index for iron ore averaged $105/dmt CFR Qingdao, down by $1/dmt on month, while the price of second grade metallurgical coke in North China under Mysteel's assessment gained by Yuan 6/t on month to reach Yuan 1,957/t on average.

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