Posted on 03 Aug 2023
Improved sentiment in the domestic steel market in June resulted in seven of China's top ten steelmaking provinces posting on-year gains in crude steel production, according to the latest data released by the country's National Bureau of Statistics (NBS).
Although the impact on consumption from the hot and humid weather remained in June, major domestic steelmaking regions saw steelmakers profitability improve last month, which led mills to resume operations or ramp up production, market sources noted.
By end-June, 64% of the 247 blast-furnace (BF) steel mills under Mysteel's assessment had managed to earn some profits, much higher than the 32.9% of steelmakers which said they had made money in May.
The recovery in finished steel prices in June was what caused profits to rise, with China's daily price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment, averaging Yuan 3,826/tonne ($532.7/t) including the 13% VAT that month, higher by Yuan 39/t from May, according to Mysteel's tracking.
Meanwhile, sentiment in the country's steel market also lifted in June, causing most steel-producing centres to become busier, sources added.
For example, China's Purchasing Managers' Index for the domestic steel industry reached 49.9 for June, the PMI having rebounded by a large 14.7 percentage points on month after a three-month decline, the official index compiler CFLP Steel Logistics Professional Committee noted at the time.
Nevertheless, three of the top ten steelmaking hubs still under-performed in June, the NBS data showed.
For example, output in the country's largest steel-producing region, North China's Hebei province, declined by 3.47% on year in June to total 19.95 million tonnes, with industry watchers citing local steel mills halting operations as the key reason.
In late June, most steel re-rollers in Tangshan, Hebei's major steel-producing hub, were requested by local authorities to halt operations to help alleviate the deteriorating air quality over the city, as Mysteel Global reported.
Mysteel's survey of 35 section re-rollers in Tangshan showed that as of June 26, their operational rate had dropped fast to around 15%, compared to the 40.4% average run-rate recorded on June 21.
Meanwhile, on a six-monthly basis, slightly fewer regions could boast rises in output, the NBS numbers show, with only six of the top ten steelmaking provinces posting on-year gains in their crude steel production during January-June (Table 2).
Source:Mysteel Global
