China BF mills’ rebar profits narrow in Dec

Posted on 13 January 2021

Higher production costs saw the profit margins that China’s blast-furnace steel mills gained from producing rebars narrow in December, according to Mysteel’s latest monthly report released on January 9. The rally in raw material prices last month outpaced growth in domestic rebar prices.

 

For December, the margin that the 91 mills sampled by Mysteel were earning on rebar averaged Yuan 92/tonne ($14.2/t), lower by a large Yuan 55/t from that in November, as their rebar production costs last month had increased by a large Yuan 381/t on month to Yuan 4,150/t including the 13% VAT, the survey showed.

The average on-month growth in the price of HRB 400 20mm dia rebar, for example, was only assessed at Yuan 156/t during the same period, according to Mysteel’s data.

Last month, molten iron costs among the domestic BF mills moved up further by Yuan 278/t or 10.9% on month to average Yuan 2,832/t excluding the 13% VAT, mainly due to higher raw materials prices including those of iron ore and coke, the report said.

Mysteel’s SEADEX 62% Fe Australian Fines iron ore price continued to rise substantially in December, jumping by $31.75/dmt on month to average $155.75/dmt. The national composite price of coke gained another Yuan 122/t from November to reach Yuan 2,198/t on average last month.

However, profit margins of the eleven sampled re-rollers under Mysteel’s monthly monitoring improved further in December, despite the sharp rise of Yuan 250/t in their production costs, the report pointed out. The re-rollers earned an average of Yuan 280/t on their rebar sales, higher by Yuan 40/t from that in November.

As for flat steel, the profit margins on hot-rolled coils (HRC) among the surveyed mills increased to Yuan 314/t on average in December, up Yuan 64/t on month, according to the survey. The margins on medium plate rose by a huge Yuan 128/t on month to Yuan 185/t.

“The large rise in domestic HRC prices offset some growth in the production cost,” a market source in Shanghai explained. For December, China’s national price of Q235 4.75mm HRC was assessed at Yuan 4,530/t including the 13% VAT on average, jumping by Yuan 478/t from the prior month, mainly thanks to the firm demand from downstream users both at home and abroad, Mysteel Global noted.

Source : Mysteel Global