Posted on 12 Feb 2025
The profits that Chinese blast-furnace (BF) steel mills accrued on their finished steel sales improved in January, mainly thanks to lower production costs from the fall in prices of steelmaking raw materials, according to Mysteel's latest monthly survey among the 91 BF mills under its tracking.
Last month, the average profit on sales of hot-rolled coil (HRC) among the sampled steelmakers reached Yuan 57/tonne ($7.8/t), rising by Yuan 12/t on month, while that on sales of medium plate posted an on-month rise of Yuan 15/t to reach Yuan 123/t.
Although the sampled mills continued to lose money when selling their rebars last month, their average loss had narrowed further to Yuan 8/t as against their average loss of Yuan 35/t in December, the findings showed.
Chinese BF mills' margins on finished steel sales (Unit: Yuan/t)
Products | Jan | Dec | MoM |
Rebar | -8 | -35 | 27 |
HRC | 57 | 45 | 12 |
Medium plate | 123 | 108 | 15 |
Source: Mysteel
Profitability improved mainly because production costs of the domestic mills decreased last month with the slide in prices of iron ore and metallurgical coke, Mysteel Global learned.
For January, the average cost of making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,575/t excluding the 13% VAT, down by another Yuan 22/t or 0.8% from the December average.
During January, the Mysteel SEADEX 62% Australian Fines index for iron ore reached $101/dmt CFR Qingdao on average, slipping by $2/dmt on month, while the price of second grade metallurgical coke in North China under Mysteel's assessment dropped by Yuan 96/t on month to average Yuan 1,570/t, the survey results showed.
The Chinese mills' production costs on finished steel products witnessed sharper falls in January, which offset some decreases in domestic steel prices, Mysteel Global noted.
During January, the average production cost of making rebar among the sampled steelmakers declined by Yuan 53/t on month to reach Yuan 3,245/t including the 13% VAT, according to the survey. At the same time, those of HRC and medium plate slipped by Yuan 51/t and Yuan 80/t respectively on month to reach Yuan 3,323/t and Yuan 3,338/t including the VAT.
China's finished steel prices weakened in January, as demand from end-users was dull after most had left the market to celebrate Chinese New Year (CNY). The domestic spot market came into a standstill due to the long holiday over January 28-February 4.
For example, on January 27 the last working day before the holiday, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment, was assessed by Mysteel at Yuan 3,474/t including the 13% VAT, lower by Yuan 21/t from the end of December. In parallel, the national average price of Q235 4.75mm HRC under Mysteel's assessment had declined by Yuan 15/t during the same period to Yuan 3,483/t including the 13% VAT.
With the thin demand, steel stocks have seen some accumulation. By the end of January, total inventories of the five major steel products comprising rebar, wire rod, HRC, cold-rolled coil and medium plate at traders' warehouses in the 132 cities Mysteel tracks nationwide had reached 14.55 million tonnes, up for the fourth consecutive week or higher by 14.1% on month, according to Mysteel's other survey.
Source:Mysteel Global
