Posted on 18 Jul 2024
The losses borne by Chinese blast-furnace (BF) steel mills enlarged in June, mainly due to the significant fall in finished steel prices, according to Mysteel's latest monthly survey among the 91 BF mills under its tracking.
For June, the sampled Chinese steelmakers lost a steeper Yuan 98/tonne ($13.5/t) on average when selling rebar, as against the average loss of Yuan 13/t in May, and their average loss on sales of medium plate widened by Yuan 5/t on month to Yuan 15/t.
Regarding their sales of hot-rolled coil, the surveyed BF mills still managed to earn an average profit of Yuan 19/t in June, though the margin also shrank further by Yuan 14/t from that for May, the findings showed.
Chinese BF mills profits on finished steel sales (Unit: Yuan/t)
Products | Jun | May | MoM |
Rebar | -98 | -13 | -85 |
HRC | 19 | 33 | -14 |
Medium plate | -15 | -10 | -5 |
Source: Mysteel
China's finished steel prices fell substantially in June, as demand from end-users remained poor with heavy rains and high temperatures in most regions of the country, which caused disruptions to outdoor construction activity and aggravated negative sentiment in the domestic market, Mysteel Global noted.
As of June 28, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment, was assessed by Mysteel at Yuan 3,626/t including the 13% VAT, sliding by a marked Yuan 204/t compared with the end of May.
Rebar prices in the derivative market also lost ground, with the most-traded rebar contract on the Shanghai Futures Exchange for October delivery closing the daytime trading session at Yuan 3,544/t on June 28, lower by Yuan 171/t from the settlement price on May 31, according to the exchange's data.
Steel sales in the physical market slowed further, as the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 traders under Mysteel's tracking registered only 119,412 tonnes/day on average in June, slumping by another 13,399 t/d or 10.1% on month.
Although production costs among domestic steel producers decreased accordingly last month with lower prices of major steelmaking raw materials such as iron ore and metallurgical coke, they failed to improve mills' profitability with the fast fall in steel prices, Mysteel Global learned.
During June, the cost of making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,715/t excluding the 13% VAT, down by Yuan 74/t or 2.7% from the previous month.
Last month, the Mysteel SEADEX 62% Australian Fines index for iron ore registered $106/dmt CFR Qingdao on average, slipping by $11/dmt on month, while the price of second grade metallurgical coke in North China under Mysteel's assessment averaged Yuan 1,951/t, seeing an on-month fall of Yuan 107/t.
However, Chinese steelmakers' production remained high last month, placing more pressure on the domestic steel market. In June, China's daily crude steel production averaged 3.05 million t/d, higher by another 1.9% from the average for May, Mysteel Global calculated based on the data released by the country's National Bureau of Statistics.
Source:Mysteel Global
