Weekly: Healthy profits boost BF production in China

Mysteel: Production enthusiasm among Chinese blast furnace (BF) steelmakers continued growing this week, as recent rises in steel prices led to a clear improvement in mills' profitability, while steel demand from end-users showed a marked recovery, Mysteel's latest survey showed.

During 4-10 October, the BF capacity utilisation rate among the 247 steel producers under Mysteel's regular tracking climbed up for the sixth consecutive week to reach 87.51%, higher by 1.9 percentage points from the previous week.

The operational rates among these sampled mills averaged 80.79% during the same period, gaining 1.22 percentage points from one week before. Accordingly, their daily hot metal output increased by 2.2% w-o-w to 2.33 million tonnes (mnt), the survey showed.

Steelmakers across the country have been actively bringing their idled furnaces back online after observing the rally of steel prices recently, Mysteel Global learnt. As of 10 October, for example, China's national spot price for HRB400E 20 mm diameter rebar was assessed at RMB 3,891/tonne (t) ($549.6/t), including the 13% VAT, hovering at around a seven-month high.

By the same day, around 71% of the 247 BF mills under Mysteel's tracking could earn profits on steel sales, leaping by 52 percentage points from a week earlier and hitting the highest level since April 2022.

In addition to improved profitability, the recovery in steel consumption by downstream users also encouraged domestic steelmakers to ramp up production, Mysteel's other survey showed.

China's total consumption of the five major carbon steel products-rebar, wire rod, hot-rolled coil, cold-rolled coil, and medium plate - increased by a significant 10.7% w-o-w to reach 8.9 mnt over 4-10 October.

As a result, the daily consumption of imported iron ore by the 247 BF mills Mysteel monitors went up by 1.9% from the prior week to reach 2.9 mnt during 4-10 October. Mills have sped up their replenishment of iron ore to meet their growing production demand.

By 10 October, the total inventories of imported iron ore in all forms held by the same 247 BF mills mounted to 89.9 mnt, higher by 3 mnt or 3.5% w-o-w. The stocks would be sufficient for 31.2 days at their current usage rate, longer by 0.5 days than the previous period, Mysteel assessed.

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