Posted on 13 Jul 2022
The struggles of China's blast-furnace steel producers worsened in June as finished steel prices slipped faster last month and squeezed their profit margins, according to Mysteel's latest monthly survey among 91 Chinese BF steel mills. The makers' finances suffered despite the decrease in the mills' production costs.
Last month, the average gross loss on rebar sales that the sampled steelmakers incurred was assessed at Yuan 317/tonne ($47.1/t), deepening by Yuan 249/t from that for May. In parallel, the average loss that mills were incurring selling hot-rolled coil (HRC) also increased to Yuan 261/t from the Yuan 15/t during the prior month.
The surveyed mills' profit margins on medium plate sales became negative as well in June, averaging Yuan 195/t, the survey found, as against the average profit of Yuan 47/t in May.
The deeper overall loss was mainly blamed on the sharp fall in finished steel prices last month, as the recovery in demand from end-users was slower than market participants had expected, with the frequent heavy rains in southern China and high temperatures in northern China, Mysteel Global noted. Indeed, the easing of the COVID-19 restrictions and the lifting of lockdowns in Shanghai from the start of June failed to improve the mills' profitability.
For example, the national price of HRB400E 20mm dia rebar under Mysteel's assessment averaged Yuan 4,580/t including the 13% VAT in June, falling by Yuan 325/t from the previous month.
Last month, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 Chinese traders under Mysteel's tracking registered 155,960 tonnes/day on average, only up by 1,807 t/d from that for May.
Although BF mills' production costs also declined in June, thanks to the softening of major steelmaking raw materials prices, the decrease was small compared with the decline in finished steel prices, Mysteel Global learned.
For June, the costs for making molten iron among the 91 surveyed mills averaged Yuan 3,275/t excluding the 13% VAT, down for the second month by another Yuan 135/t or 4% on month.
Last month, Mysteel SEADEX 62% Australian Fines averaged $130/dmt CFR Qingdao, lower by $3/t from the May average, while the price of class 2 metallurgical coke in North China dropped by Yuan 283/t on month to average Yuan 3,276/t, according to the survey.
Source:Mysteel Global
