Chinese blast-furnace (BF) steel mills saw a continued easing of losses on finished steel sales in February thanks to the further decrease in their production costs, according to Mysteel’s latest monthly survey among the 91 BF mills under its tracking.
In February, the average loss on rebar sales among the sampled steelmakers reached Yuan 66/tonne ($9.2/t), down by Yuan 96/t from the previous month, and that on sales of hot-rolled coil registered Yuan 16/t, narrowing considerably from the average loss of Yuan 95/t in January. Meanwhile, the sampled mills also suffered an average loss of Yuan 58/t when selling the medium plate, easing by Yuan 44/t compared with January, the findings showed.
Chinese BF mills profits on finished steel sales (Unit: Yuan/t)
| Products | Feb | Jan | MoM |
| Rebar | -66 | -162 | 96 |
| HRC | -16 | -95 | 79 |
| Medium plate | -58 | -102 | 44 |
The results were mainly attributed to the continuous fall in prices of major steelmaking raw materials such as iron ore and metallurgical coke, which reduced the production costs of Chinese BF mills, Mysteel Global learned.
Last month, Mysteel SEADEX 62% Australian Fines index for iron ore was assessed at $124/dmt CFR Qingdao on average, sliding by another $10/dmt on month, and the price of second grade metallurgical coke in North China under Mysteel’s assessment dropped by Yuan 105/t on month to reach Yuan 2,238/t on average, according to the survey.
For February, the cost of making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,870/t excluding the 13% VAT, lower by Yuan 70/t or 2.4% from the prior month.
However, the lower production cost failed to reverse the losses of Chinese steelmakers, mainly due to the weakness in finished steel prices in late February driven by the poor performance in demand from end-users, Mysteel Global noted.
For example, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment under Mysteel’s assessment, had slipped to Yuan 3,983/t including the 13% VAT as of February 29, losing by Yuan 57/t from the end of January.
With the lackluster demand, 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 nationwide under Mysteel’s weekly survey swelled to 28.68 million tonnes as of February 29, soaring by 50.6% compared with one month earlier.
Written by Nancy Zheng
Source: MySteel
