Posted on 11 Nov 2022
Despite the decrease in their production costs, Chinese blast-furnace steel mills fell into the red again with their finished steel sales in October, due chiefly to the drop in domestic steel prices, according to Mysteel's latest monthly survey released on November 9.
Last month, the average loss on rebar sales among the 91 sampled BF steel mills across China was estimated at Yuan 82/tonne ($11.3/t), as against the tiny profit of Yuan 21/t they earned in September, the data show. Similarly, the mills' average loss on selling medium plate was Yuan 90/t, compared with the profit of Yuan 25/t they earned on plate sales in the previous month.
Worse still, the sampled mills suffered even larger losses on their sales of hot-rolled coil (HRC) in October, with an average loss yawning wider to Yuan 156/t on average, deepening by Yuan 86/t on month, the survey found.
Most survey respondents blamed their shrinking profit margins on the persistent fall in domestic steel prices last month, reflecting the lower-than-expected demand from end-users and negative sentiment in the domestic market, Mysteel Global learned.
For example, the national price of HRB400E 20mm dia rebar, a bellwether of domestic steel-market sentiment, was assessed by Mysteel at Yuan 3,883/t including the 13% VAT as of October 31, sliding by Yuan 287/t from the end of September.
Last month, 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 156,917 tonnes/day, also lower by 23,097 t/d or 12.8% from the prior month.
Although the production costs incurred by the surveyed BF mills steadily decreased in October with the fall in iron ore prices, the cost reductions failed to reverse the downtrend in their profit margins, Mysteel Global noted.
During October, the cost for making hot metal among the 91 surveyed mills averaged Yuan 2,890/t excluding the 13% VAT, down for the sixth consecutive month by another Yuan 20/t or 0.7% on month.
Last month, the Mysteel SEADEX 62% Australian Fines index was assessed at $92.3/dmt CFR Qingdao on average, down another $5.7/t from the average for September, while the price of class 2 metallurgical coke in North China gained Yuan 96/t on month to average Yuan 2,769/t, the survey showed.
Source:Mysteel Global
