Posted on 20 Jun 2024
The profit margins enjoyed by Chinese blast-furnace (BF) steel mills in May fell sharply as rising prices of major steelmaking raw materials sent their production costs higher, according to Mysteel's latest monthly survey among the 91 BF mills under its tracking.
Last month, the sampled Chinese mills lost Yuan 13/tonne ($1.8/t) on average when selling rebars – as against an average profit of Yuan 76/t in April – while their average loss on sales of medium plate was Yuan 10/t compared with a profit of Yuan 80/t during the prior month.
The sampled steel producers could still gain some profits on sales of hot-rolled coil in May, though their average margin shrank to just Yuan 33/t, falling by Yuan 119/t on month, the survey results showed.
Chinese BF mills profits on finished steel sales (Unit: Yuan/tonne)
Products | May | Apr | MoM |
Rebar | -13 | 76 | -89 |
HRC | 33 | 152 | -119 |
Medium plate | -10 | 80 | -90 |
Source: Mysteel
Prices of major steelmaking raw materials such as iron ore and metallurgical coke moved up in May, lifting the production costs of domestic steelmakers and swallowing up their profit margins, Mysteel Global learned.
During May, the Mysteel SEADEX 62% Australian Fines index for iron ore averaged $117/dmt CFR Qingdao, rising by $7/dmt on month, while the price of second grade metallurgical coke in North China under Mysteel's assessment averaged Yuan 2,058/t, higher by Yuan 242/t from April.
Last month, the cost of making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,789/t excluding the 13% VAT, up by Yuan 58/t or 2.1% on month, the findings showed.
China's finished steel prices kept rangebound at a relatively high level in May, mainly thanks to the support of positive sentiment prompted by the central government's series of new measures to stabilize development in the property sector, as reported.
As of May 31, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment, was assessed by Mysteel at Yuan 3,830/t including the 13% VAT, up by Yuan 16/t from one month earlier.
Some Chinese steelmakers including blast furnace and electric-arc-furnace mills resumed operations or ramped up production last month, leading to a significant recovery in steel output.
The latest release by the National Bureau of Statistics (NBS) on Monday showed that China produced 92.9 million tonnes of crude steel in May, up by 2.7% on year. On a daily basis, the country's crude steel output averaged 3 million tonnes/day last month, jumping by 4.6% on month, Mysteel Global calculated based on the NBS data.
However, domestic steel demand from end-users slowed somewhat last month, as construction activity in southern China had been disrupted by the frequent rainfalls there, which dampened further growth in China's finished steel prices, Mysteel Global noted.
Mysteel's other survey showed that the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 traders under its tracking averaged 132,811 t/d for May, slipping by 18,505 t/d or 12.2% from the average for the prior month.
Source:Mysteel Global
