Posted on 13 Oct 2022
The profits that Chinese blast-furnace steel mills were earning on their rebar sales shrank sharply in September due to the decrease in domestic prices of these longs, according to Mysteel's latest monthly survey among 91 sampled BF steel mills across China. On the other hand, their profits on sales of flat steel improved last month thanks to the continuous decrease in their production costs.
Last month, the average profit on rebar sales among the sampled BF steel mills came in at Yuan 21/tonne ($2.9/t), down by Yuan 20/t compared with that for August. The surveyed mills mainly blamed the decrease on weakening domestic rebar prices.
For example, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment, was assessed by Mysteel at Yuan 4,126/t including the 13% VAT on average in September, down Yuan 136/t from the previous month, Mysteel Global learned. Demand from end-users was below market expectations, though it had recovered somewhat compared with that for August.
For September, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the 237 Chinese trading houses under Mysteel's tracking averaged 180,014 tonnes/day, higher by 32,583 t/d or 22.1% from the prior month, but it was still below the threshold of 200,000 t/d for September-October, the traditional peak season for steel consumption in China.
The mills' profits halved, even though the production costs of the sampled BF mills had declined in September with the further decrease in iron ore prices. During last month, the cost for making hot metal among the 91 surveyed mills averaged Yuan 2,910/t excluding the 13% VAT, down for the fifth straight month by another Yuan 16/t or 0.5% on month.
Last month too, the Mysteel SEADEX 62% Australian Fines index averaged $98/dmt CFR Qingdao, losing another $6/t from the average for August, while the price of class 2 metallurgical coke in North China had increased by Yuan 64/t on month to average Yuan 2,673/t, the survey found.
With the continuous fall in their production costs, the losses that the surveyed BF steelmakers suffered on their sales of hot-rolled coil eased to Yuan 70/t last month - as against the Yuan 118/t loss in August - and their profit margins on selling medium plate averaged Yuan 25/t, higher by Yuan 14/t on month, the survey showed.
Source:Mysteel Global
