Monthly: Losses for China's Blast Furnace Mills Ease

In January, the losses incurred by Chinese blast-furnace steel mills when selling their finished steel showed some alleviation, primarily attributed to a slight reduction in production costs. This reduction was a result of the decreased prices of key steelmaking raw materials, as indicated by Mysteel's most recent monthly survey of 91 blast furnace steel producers.

During January, the average loss on rebar sales among the sampled mills registered Yuan 162/tonne ($22.5/t), easing by Yuan 39/t from that during December, while that on sales of hot-rolled coil averaged Yuan 95/t, as against Yuan 193/t for the previous month. Meanwhile, last month the surveyed steelmakers still lost Yuan 102/t when selling their medium plate, though this was lower by Yuan 83/t on month.

Prices of major steelmaking raw materials decreased somewhat in January, reducing the production costs of domestic steel mills, Mysteel Global noted.

In January, Mysteel SEADEX 62% Australian Fines index for iron ore was assessed at $134/dmt CFR Qingdao on average, slipping by $2/dmt from the prior month, while the price of second grade metallurgical coke in North China under Mysteel's assessment declined by Yuan 124/t on month to average Yuan 2,343/t, according to the survey.

Last month, the cost of making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,940/t excluding the 13% VAT, dipping by Yuan 15/t or 0.5% compared with the previous month.

China's finished steel prices remained largely rangebound in January due to the slowing demand from end-users with the approaching Chinese New Year (CNY) holiday over February 10-17, Mysteel Global noted.

As of January 31, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment under Mysteel's assessment, came in at Yuan 4,040/t including the 13% VAT, down by Yuan 34/t from the end of December.

Transactions in the physical market slowed further last month, with the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 Chinese trading houses under Mysteel's regular tracking averaging 100,786 tonnes/day, sliding by another 34,020 t/d or 25.2% on month.

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