High production costs caused Chinese blast-furnace steel mills to continue losing money on finished steel sales in November, though their losses on sales of rebar and hot-rolled coil eased to some extent thanks to the further recovery in steel prices, according to Mysteel’s latest monthly survey among 91 blast furnace steel producers.
Last month, the average loss on rebar sales among the sampled mills came in at Yuan 71/tonne ($9.9/t) as against the Yuan 136/t in October, the findings showed, while their average loss on sales of HRC reached Yuan 130/t, easing by Yuan 29/t from the previous month.
The Chinese mills’ improved profitability was mainly attributed to the steady recovery in steel prices, stemming from positive sentiment in the domestic market and steady demand from steel end-users, Mysteel Global learned.
As of November 30, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment, was assessed by Mysteel at Yuan 4,052/t including the 13% VAT, higher by Yuan 174/t compared with the end of October.
At the same time, the price of Q235 4.75mm HRC under Mysteel’s assessment also increased by Yuan 142/t on month to reach Yuan 4,020/t including the VAT by end-November.
Last month, finished steel inventories at traders’ warehouses largely declined, indicating that demand from end-users was not so bad despite the onset of winter and the usual fall in steel consumption.
As of November 30, total inventories of the five major steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate at traders’ warehouses in the 132 cities nationwide under Mysteel’s tracking reached 14.92 million tonnes, lower by 8.7% on month.
However, Chinese steelmakers still face great pressure from rising costs, the survey found. The sampled mills suffered steeper losses on their sales of medium plate in November, with the average loss reaching Yuan 135/t, deepening by Yuan 10/t on month.
For November, the cost of making hot metal among the 91 surveyed mills was assessed by Mysteel at Yuan 2,895/t excluding the 13% VAT, up by another Yuan 42/t or 1.5% from the previous month – a rise mainly blamed on firming prices of some steelmaking raw materials.
During November, Mysteel SEADEX 62% Australian Fines index for iron ore averaged $130/dmt CFR Qingdao, higher by $12/dmt on month, though the price of second grade metallurgical coke in North China under Mysteel’s assessment slipped by Yuan 32/t on month to Yuan 2,248/t on average, according to the survey.
