Posted on 16 May 2024
Chinese blast-furnace (BF) steel mills managed to earn profits on their sales of major finished steel products in April, mainly thanks to the further decrease in their production costs and the recovery in domestic steel prices, according to Mysteel's latest monthly survey among the 91 BF mills under its tracking.
For April, profits on rebar sales among the sampled steel mills came in at Yuan 76/tonne ($10.5/t) on average, as against the average loss of Yuan 118/t in March, the survey result showed.
Meanwhile, the surveyed mills' profits on sales of hot-rolled coil increased by Yuan 102/t on month to average Yuan 152/t, and they gained an average profit of Yuan 80/t on selling medium plate, higher by Yuan 17/t from that for the prior month.
Chinese BF mills profits on finished steel sales (Unit: Yuan/t)
Products | Apr | Mar | MoM |
Rebar | 76 | -118 | 194 |
HRC | 152 | 50 | 102 |
Medium plate | 80 | 63 | 17 |
Source: Mysteel
One major reason for domestic mills' better profit margins last month was the fall in their overall production costs, as the prices of metallurgical coke continued to move down, though those of iron ore recovered somewhat, Mysteel Global learned.
Specifically, the cost of making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,731/t excluding the 13% VAT in April, slipping by another Yuan 28/t or 1% on month.
Last month, the price of second grade metallurgical coke in North China under Mysteel's assessment registered Yuan 1,816/t on average, losing by another Yuan 167/t from the previous month, while the Mysteel SEADEX 62% Australian Fines index for iron ore reached $110/dmt CFR Qingdao on average, up slightly by $2/dmt on month.
China's finished steel prices headed north in April thanks to the improved demand from end-users and better performance of ferrous futures markets, which was cited as another factor for the improved profitability among Chinese steelmakers, Mysteel Global noted.
As of April 30, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment for example, was assessed by Mysteel at Yuan 3,814/t including the 13% VAT, increasing by Yuan 200/t compared with the end of March.
Steel transactions in the physical market recovered further this month, as more end-users returned to the market for replenishment, and speculative demand also improved with positive sentiment in the domestic steel market.
For April, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 traders under Mysteel's regular survey averaged 151,316 tonnes/day, higher by 29,521 t/d or 24.2% from that for March.
Inventories of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil, and medium plate held by domestic steel mills and traders both moved lower continuously in April.
By end-April, the tonnage of the five major steel items held by the Chinese steel mills under Mysteel's regular survey fell to 5.1 million tonnes, lower by a marked 24% on month, and the volume at traders' warehouses in the 132 cities nationwide under Mysteel's tracking also slipped by 16% on month to 23 million tonnes.
Source:Mysteel Global
