Posted on 07 Feb 2023
The daily hot metal output at 247 blast furnace (BF) steelmakers across China under Mysteel's survey is estimated to rise modestly to average 2.29 million tonnes/day in February, reflecting mills' scheduled production resumption though the pace may slow, according to Mysteel's assessment.
In January, these 247 mills produced 2.24 million tonnes of hot metal per day on average, higher by 1% on month, Mysteel's survey showed.
Mills in North and East China had restarted some of their BFs after previous regular or annual maintenance works, as reported. Some mills increased their steel output in anticipation of a steel consumption revival after the Chinese New Year holiday that ended on January 27, Mysteel Global noted.
Mysteel's survey showed that steel mills across the country planned to bring 25 BFs back online in February, involving a total capacity of 94,000 t/dm while another five BFs with a capacity totaling 16,000 t/d will be taken off for maintenance.
In this case, the average hot metal output among the 247 steel mills will be 2.32 million t/d this month, Mysteel estimates.
Nevertheless, steel mills may not resume their production as much as expected, if their steel margins become poorer later this month, pointed out a Shanghai-based analyst, saying that the hot metal output may be around 2.29 million t/d through the month.
In fact, finished steel margins among China's BF mills shrank again last week after the previous transient recovery, Mysteel Global noted.
For example, the average loss on rebar sales among Chinese BF steelmakers deepened to Yuan 77.23/tonne ($11.4/t) as of February 2, from the loss of Yuan 38.67/t during the prior week, Mysteel's tracking showed.
Fundamentally, Chinese prices of finished steel ended the three-month uptrend and have retreated since last Wednesday. For example, China's national price of HRB400E 20mm dia rebar under Mysteel's assessment dropped to Yuan 4,289/t including the 13% VAT on February 3, after it recovered to Yuan 4,338/t including the 13% VAT on January 30.
The previous positive market sentiment on an expected recovery in steel demand in the near term turned clouded last week, with more market pundits questioning the likelihood that the demand for steel will restore as much as they had expected, Mysteel Global understood.
In addition, market fundamentals of finished steel may deteriorate afterward from the current level which was relatively healthy, because steel stocks at mills and traders' warehouses will accumulate further in the coming two weeks based on historical statistics, a ferrous analyst from a Shanghai-based futures company listed another negative factor for mills' margins.
Source:Mysteel Global
