Posted on 18 May 2022
Mysteel's latest survey among 40 independent electric-arc-furnace (EAF) steel mills nationwide showed that as of May 13, they were losing around Yuan 35 ($5.2) on every tonne of rebar they sold while over the previous survey period, these mills could still enjoy a margin albeit a tiny Yuan 15/t. Market watchers blamed the steady fall in domestic steel prices over the past few weeks for the mini-mills' thinning margins.
The COVID-related restrictions on goods transportation and manufacturing operations, plus the heavy rainfalls in southern areas of China, have impacted steel demand and weakened steel market sentiment, undermining domestic steel prices too, a Shanghai-based market watcher explained. And even though their production costs have declined somewhat, the steelmakers, especially EAF producers, have been compelled to cut steel output due to their shrinking profits or losses, she remarked.
As of May 13, China's national price of HRB400 20mm dia rebar, for example, had lost another Yuan 158/t on week to reach Yuan 4,956/t, according to Mysteel's assessment.
Last week's fall in the rebar price was far steeper than the on-week decline of Yuan 38.4/t in the domestic steel scrap price index to Yuan 3,869.2/t, both including the 13% VAT, Mysteel Global notes.
Consequently, as of May 12 the steelmaking capacity utilization rate among China's 85 EAF mills nationwide under Mysteel's survey reversed down from the prior week's rise, falling by 2.56 percentage points on week to 67.05% – a three-week low.
And it's not only the mini-mills that are suffering. The blast-furnace mills consuming both steel scrap and iron ore in steelmaking have also been cautious regarding steel scrap procurement as their margins are declining too. The BF mills require a certain proportion of scrap in their furnaces and BOFs for temperature regulation and the recent price declines in iron ore have also compromised the pricing competitiveness of scrap, Mysteel Global noted.
For example, by the end of last week, Mysteel SEADEX 62% Australian Fines edged down by a larger $10.35/dmt on week to $128.4/dmt CFR Qingdao, according to the database.
Source:Mysteel Global
