Posted on 14 Oct 2024
The number of integrated steel mills in China finally earning profits on their steel sales has rapidly increased recently, as prices of finished steel have been hovering at a relatively high level, while the mills' production costs have remained low, according to new Mysteel data.
As of October 10, the ratio of blast-furnace steelmakers admitting to earning positive margins on steel sales among the 247 BF mills nationwide under Mysteel's regular tracking reached 71.43%, a huge increase compared with only 18.61% of the mills saying they were earning money among those surveyed just two weeks earlier and marking the highest proportion since late April 2022.
The fast recovery in profitability among the sampled Chinese mills was mainly attributed to the higher prices of finished steel, though these have retreated somewhat with the cooling of market sentiment after the week-long holiday.
Also as of October 10, the national price of HRB400E 20mm dia rebar, a pointer to domestic steel-market sentiment, was assessed by Mysteel at Yuan 3,891/tonne ($551/t) including the 13% VAT, higher by Yuan 406/t from two weeks earlier but lower by Yuan 89/t from the recent high recorded on October 8.
In parallel, production costs among the domestic BF steelmakers hovered low during the past two weeks, with the cost of making hot metal among the 114 Chinese mills under Mysteel's other survey averaging Yuan 2,581/t excluding the 13% VAT, higher by just a minuscule Yuan 19/t on fortnight.
Many Chinese steel producers are preparing to ramp up production given their improved profit margins on steel sales and the rather low volumes of steel held in stock by both mills and traders, Mysteel Global noted.
Over October 3-9, total production of the five major steel products comprising rebar, wire rod, hot-rolled coil (HRC), cold-rolled coil (CRC) and medium plate among the steel mills monitored by Mysteel had increased for the fourth straight week to 8.64 million tonnes, rising by another 1.2% from the prior week.
As of October 10, inventories of the five major steel items among the sampled steel mills reversed down after the short-lived rise during the long break to reach 3.95 million tonnes, down 2.1% from the total on October 6. During the same period, stocks of these products at traders' warehouses in the 132 cities nationwide under Mysteel's regular survey declined by 1.2% to 15.43 million tonnes.
Source:Mysteel Global
