Posted on 19 Sep 2024
Chinese blast-furnace (BF) steel mills continued to lose money on finished steel sales in August, mainly due to the persistent weakness of steel prices with the lackluster demand from end-users during the summer off-season for steel consumption, according to Mysteel's latest monthly survey among the 91 BF mills under its tracking.
Last month, the sampled steelmakers suffered more losses on flat steel, with the average loss on sales of hot-rolled coil (HRC) reaching Yuan 250/tonne ($35.3/t), deepening by Yuan 100/t from the previous month. The mills also lost an average of Yuan 218/t on sales of medium plate last month, as against the average loss of Yuan 90/t for July, the survey results showed.
Chinese BF mills' profits on finished steel sales (Unit: Yuan/t)
Products | Aug | Jul | MoM |
Rebar | -170 | -249 | 79 |
HRC | -250 | -150 | -100 |
Medium plate | -218 | -90 | -128 |
Source: Mysteel
On the other hand, the average loss on rebar sales among the sampled steel producers eased somewhat last month to reach Yuan 170/t from July's average of Yuan 249/t, mainly thanks to the decline in average production costs being borne by the mills with the fall in prices of major steelmaking raw materials such as iron ore and coke.
Last month, the cost of making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,600/t excluding the 13% VAT, falling by Yuan 75/t or 2.8% from the previous month, according to the survey.
During August, the Mysteel SEADEX 62% Australian Fines index for iron ore registered $98/dmt CFR Qingdao, lower by $7/dmt on month, while the price of second grade metallurgical coke in North China under Mysteel's assessment slipped by Yuan 205/t on month to reach Yuan 1,752/t on average, the findings showed.
In parallel, the low production rates led the decrease in domestic rebar prices to slow to some extent, which was considered another factor mitigating the mills' losses on rebar sales, Mysteel Global noted.
For example, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment, came in at Yuan 3,337/t including the 13% VAT as of August 30, lower by Yuan 44/t from the end of July, while that of Q235 4.75mm HRC had dropped by Yuan 241/t during the same period to Yuan 3,247/t including the 13% VAT, according to Mysteel's assessment.
However, China's steel demand was still tepid overall in August. Consumption from end-users had been dampened by the high temperatures and frequent heavy rains across most regions of the country last month, causing spot sales to remain listless, Mysteel Global learned.
Last month, 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 110,898 tonnes/day on average, lower by 5,597 t/d from that for July.
By end-August, rebar inventories at traders' warehouses in the 132 Chinese cities Mysteel monitors had steadily decreased to 6.7 million tonnes, sliding by 1.98 million tonnes on month, while those of HRC plied at traders' warehouses in 55 cities increased by 202,100 tonnes on month to 5.03 million tonnes, according to Mysteel's weekly survey.
Source:Mysteel Global
