Chinese blast furnace mills' profits improve in June

China's blast-furnace steel mills enjoyed healthier profit margins in June, mainly thanks to the decrease in their production costs and the recovery in finished steel prices, according to the results of Mysteel's latest monthly survey among the 91 BF steel producers it tracks.

Last month, the sampled mills' profits on rebar sales averaged Yuan 84/tonne ($11.7/t), as against an average loss of Yuan 52/t during May, the findings showed. Their profits on sales of hot-rolled coil (HRC) last month were also around Yuan 68/t, higher by Yuan 154/t on month.

Thanks to lower prices of some steelmaking raw materials, the cost of production in June for the domestic steel mills slipped further, which bolstered their margins, Mysteel Global learned.

During June, the cost for making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,745/t excluding the 13% VAT, down by another Yuan 36/t or 1.3% from the previous month.

Met coke prices also continued to move down last month, offsetting the growth in prices of imported iron ore, Mysteel Global noted.

The price of second grade metallurgical coke in North China under Mysteel's assessment averaged Yuan 1,889/t in June, sliding by Yuan 168/t on month, though Mysteel SEADEX 62% Australian Fines index increased by $8/dmt on month to average $112/dmt CFR Qingdao.

Chinese steel prices recovered somewhat in June thanks to improved domestic-market sentiment fuelled by hopes of more stimulus policies from the government to boost economic growth in the second half year.

As of June 30, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment under Mysteel's assessment, was at Yuan 3,855/t including the 13% VAT, gaining Yuan 175/t from one month earlier.

However, transactions in the physical market remained lackluster because of the usual summer doldrums for steel sales in China, Mysteel Global noted.

Last month, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the country's 237 traders under Mysteel's tracking averaged 154,830 tonnes/day, falling by another 1,869 t/d from the average for May.

Written by Nancy Zheng, zhengmm@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com

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